With HDMI you're limited to only new LCD/TV's or HD monitors.
With VGA (like mk1) you're limited to CRT/LCD's with VGA connector.
With DVI-I and an an adaptor (VGA or HDMI) you're good in both circumstances.
True. It's bigger but if you don't wanna mess with the RF Modulator, either mod it in the expansion slot under the floppy, or anywhere else via Dremel on the upper case.
You can even put an DVI to HDMI adapter inside or mount the adapter in RF Modulator place if space is not an issue (if no heavy modding is done inside)