Bungie has finally put an end to rumors and talks about the 640p resolution issue in Halo 3. According to the weekly update Bungie uses two frame buffers, and thats that.
"So what gives? Did we short change you 80 pixels? Naturally it's more complicated than that. In fact, you could argue we gave you 1280 pixels of vertical resolution, since Halo 3 uses not one, but two frame buffers - both of which render at 1152x640 pixels. The reason we chose this slightly unorthodox resolution and this very complex use of two buffers is simple enough to see - lighting. We wanted to preserve as much dynamic range as possible – so we use one for the high dynamic range and one for the low dynamic range values. Both are combined to create the finished on screen image."
"In fact, if you do a comparison shot between the native 1152x640 image and the scaled 1280x720, it’s practically impossible to discern the difference. We would ignore it entirely were it not for the internet’s propensity for drama where none exists. In fact the reason we haven’t mentioned this before in weekly updates, is the simple fact that it would have distracted conversation away from more important aspects of the game"
So nothing strange there, Bungie did confess that they used that resolution but just to make it look better. We are glad that Bungie took a stand and explained the situation, because there was no reason for such drama. Like Bungie stated "So what gives? Did we short change you 80 pixels?" You can read the full statement here.