1080 into 720 via FCStudio2's Motion smooth benefit?

[Damon Mentzer]

I have recently discovered the joy of Motion 3's Stabilize behavior. However, on a couple of shots, it needed to zoom so far in that the final image became badly pixelated (fluid pro head my **s). Is there any benefit to shooting 1080i, with the intent to use the zoom smooth behavior to stabilize the shot, then output to 720p?

I normally use jvc's Hd110, which is a 720p hdv format. I convert to Prores 422, or 422 HQ is i expect to do color or effects work. I just got the new Canon 7D, and LOVE its movie modes, but now have access to 1080i stuff. ( just realized i dont know if the 720 is P, but I assume so)
And is there a better system for smoothing? i have FCStudio2 (motion) and CS3 master (so there's After Effects) collection for editing and effects. And are CS4 and FC7 worth it for this purpose?

I realize I expand the scope of the question in the last bit there, but the first question is the most important; is there a benefit to shooting in 1080i, and the zooming on the image to smooth, and output to 720p to avoid excessive pixelization?