A system and method that support both progressive and interlaced format video transmission and display. The system utilizes de-interlacing techniques to convert input interlaced format video to progressive format video, and compress and vertically scale the progressive format video to communicate videos more efficiently in a progressive format. The system also supports interlaced and progressive displays, where after decompressing and vertically rescaling the communicated compressed progressive format video, the video may be converted to interlaced format if the display supports interlaced format video. The system is capable of dynamically switching between the progressive and the interlaced format modes.