What makes you think component is up scaled from 540p?
I have tested both VGA and component on my HDTV, they both looks pretty the same, but I prefer component because it offers more options to tune the color on my TV.

Have you done some basic troubleshooting?:
1. Try connecting you PC to you new HDTV with VGA cable, if no display most likely your TV's VGA port is faulty

2. Try connecting your Xbox to your PC monitor, if no display most likely the VGA cable is faulty

3. If you can get display with your PC monitor, change the display settings in Xbox to 1360x768 then plug in your Xbox to your new HDTV

Hi Bro, I think you need to use this thing: http://www.play-asia.com/paOS-13-71-de-49-en-70-2apg.html

I also heard some forumers said need to do some cutting at the port if you still want to use the original AV cable with HDMI.