Incorrect- big HDTVs don't handle it well either
Most any codec? Um, hardly. My guess is, you aren't testing enough file types and codecs, or at least aren't using the same variety that I am on a regular basis (MKV? No, not one that's heavily support anywhere). Even the bigger panels do a crappy job thus far. It's a known issue which is well discussed. See forums such as AVS if you want the skinny.