To answer the question you're really asking, image quality vs resolution, there has to be compromise on both ends.
Theater/BluRay/TV release? These days it pretty much needs to be HD. Yes, there have been rare SD theater releases in the past, but that was the past. HD is cheap enough to not be an excuse anymore, and it makes a major difference in image quality on a theater screen, I've projected both. Internet release, SD is fine in many cases, as default YouTube is less than SD. You have to click for higher-res, something many never do.
However, HD vs SD is becoming less and less of a concern because the only high image quality SD only cameras you're going to find now are used cameras. None of the pros are making them anymore. With that said, a used DV cam with a high enough quality to matter is going to sell for as much or more than a DSLR. If you need the pro features that come with such cameras (zebra, genlock, long record times, real audio inputs, etc) then you're comparing the $1000 used pro DV camera against a $6000-20000+ modern Pro HD camera generally.
In most of our cases, shooting narrative multi-take work and cinematic documentaries, the argument becomes a moot point. A DSLR will give you high image quality and HD resolution for more or less the same price as a used 'high image quality' pro SD camera. Some documentaries may require extended takes and in-camera audio, but again, that's not most of us here.