xxtelecine 7xx said:

why cap at 720p? no 1080p?

Back when Ady settled on 720p, his setup struggled working at 1080p so I believe that was one of the main factors. Also when it comes to the Prequels, 720p will allow shots to be reframed with no quality loss, so there'll be continuity between releases.
Finally, the resolution difference is pretty much indiscernible once you've got your Blu-Ray player's upscaler working. Just take a look at the below comparison:

EDIT: Damn you, emanswfan! :p