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It's because your not running the native resolution of the monitor, your monitor has to scale every source except when hooked up to a computer as that will run at 1680x1050. All fixed panel displays look there best when they are fed the native resolution of the display. And of course there is a difference in what kind of scaler it has built in, some are better than others.
1080p = 1920x1080 resolution
Your monitor = 1680x1050 resolution
Your screen doesn't have enough pixels to display all the pixels that the PS3 is trying to send data for. Your monitor has to crunch the image down to fit. You loose pixels and get a fuzzy image. It's totally normal that the image gets distorted when trying to scale an image up or down in resolution size.
Nothing you can really do about it other then get a 1080p TV to connect it to. Getting a higher resolution PC monitor will not really do much to fix the fuziness since the next step up in resolution for them would be 1920x1200 and would still have some kind of resolution scaling going on. It would be better, but still not as good as a native 1080p screen.
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