If I was to compare a 720p video encoded (using x264) from an untouched 1080p Blu-ray rip with the same video encoded at a similar bitrate but from a 1080p x264 rip, which one is more likely to look better in terms of perceived quality?
A lower-than-optimal bitrate video with higher resolution could easily look worst than a smaller one with proper bit per pixel dedication. Of course a very important fact is the viewing device and condition. A smaller video should get upscaled to fill the screen, for example a 1280×720 will get upscaled in full-screen mode on a 1920×1080 screen.
So, in conclusion the perceptual quality highly depends also on other factors than the resolution only.