"Down conversion" happens when you watch a 16:9 enhanced movie on a 4:3 (standard) TV set.

A 16:9 (or "anamorphic") movie has extra vertical resolution over a standard movie. What happens is the picture in an enhanced widescreen movie is vertically taller than a normal movie. However if you watch the movie "raw" people will be skinny; everything is out of proportion. A widescreen 16:9 TV will take that "taller" picture and squish it back to the proper dimentions, while still keeping all lines of resolution.

When you watch one of these movies (Columbia Tristar, Warner & New Line are almost always so enhanced) on a regular player, it must do the downconversion, or "squishing" before passing the signal to the TV set. However since NTSC only has so many lines of resolution, some information must be removed.

The traditional method is to simply remove every fourth line (a DVD movie has 480 lines of resolution). Typically this will keep the same image sharpness, however you will notice "aliasing" or "jaggies" - that's where horizontal lines on an angle appear stepped or uneven. If the movie is poorly mastered to begin with this becomes a real annoyance.

The alternate method, used only by Sony I believe, is to take those four lines of information and create three new lines. This solves the aliasing problem, however produces a picture can appear somewhat softer. I own a Sony S500D, and I can safely say this is not a problem on a 27" TV. This picture on a friend's 36" Wega & S7700 player is still phenominal.

Now, I do believe Toshiba uses the first method described, of removing a line... thus softness shouldn't be a problem. Are you sure you aren't just noticing an "artistic out-of-focus" effect? Not owning a Toshiba player or being able to view this problem makes it very difficult to diagnose.