So after tinkering with my PS3 to see if I could get it to display in 1080i, as is advertised on the box, quite unsuccessfully, I did end up playing a few times in 480p.

The overall framerate seems a BIT smoother (could be a placebo, so try it yourself), but the lag spikes do eventually end up coming around. It seems to help the overall framerate of the game, more then alleviate the actual game stuttering that occurs when things are loading in new areas, or magic spells or shouts are used.

Also, the game looks like blurry crap in 480p

IF you wanna try it out in 480p just ot experiment, and don't know how, go into your PS3's display settings, select the HDMI setup, and choose "custom" instead of automatic, a screen will show all the available resolutions to display at, and just untick 720p. Which forces the game to play in 480p instead.

Now if only I could get the game to stop crashing.

Unfortunately its the crashing that is my biggest concern, the lag can take a back seat, at least it was playable... as a slideshow

Bethesda deceived us once more, this game DOES NOT support 1080i, even though the box said it does. Its like they think they can fix everything and even the resolution with patches

Agreed. I could at least deal with the lag and wasn't worried about my hardware. Not so much with the crashes and hard locks.

Technically thats false advertising when it says that it does something on the package that it does not do.

What isn't false advertising in regards to Skyrim at this point?