With a powerful enough FPGA it's theoretically possible to take the Amiga's native low resolution PAL output and scale it up to full HD 1920x1080 without any hit on the CPU or Amiga chipset. I think HD games on an Amiga 1200 would be very cool (obviously you could make the filters configurable).
This will give you some idea of how good it could look if done properly ->
[ Show youtube player ]
As I already mentioned though, this is not something the Indivision AGA Mrk2 will do but maybe if Jens ever makes a Mrk3 he will consider it