I am not a professional in the world of web design & development, but I do have an opinion that I think can shed some light onto the matter – which may help in your decision.
By todays standards, if you want to start a website – you in fact have to start two websites. A full page (filled with rich content vids/jpgs) version & its mobile counterpart. People are surfing the web on mobile devices more than ever & it’s on tiny screens – while the desktop user is surfing the net on monitors that used to be the size of common living room televisions not too long ago.
When on the iPod Touch, I find that I stray from video watching (as the screen is too small for my liking) & stick with text/jpg based information. On my desktop (27” monitor) I find that I always choose the highest resolution (usually 1080p) for videos – as anything below 720p does not look good & I have to zoom in & enlarge it, which only makes the video look grainy & washed out.
If it is possible, provide links to both hi-res & lo-res versions of your videos on your site. That way the mobile users can watch the video without having to wait for long load/buffer times & desktop users can enjoy the fullscreen HD version.
As for changing the resolution of videos – I’ve used Quicktime’s, ‘File’ – ‘Export’ feature to change resolutions of videos & find that they keep the quality of the video intact as much as I would want it to.
Hopefully I was able to provide a little bit of helpful information. Best of luck to you & your web site.