Don, check out Sony's information on the Enhanced HDTV function with Bravia and Alpha 700.
I can only repeat here what was demonstrated, using a Bravia HDTV, at the launch of the Alpha 700. The Sony TV contains firmware which recognises the camera and the file, reads the colour profile correctly, can address a range of JPEG preview images which are contained within the raw .ARW file (one reason for the unusually large size of the Alpha 700s raws), and applies a tone curve and sharpness enhancement to the image. These functions are not present in any other TV, or in some older models. We were shown the result of a normal HDTV image, compared to the enhanced image, and it was quite dramatic.
Page 90 of the user manual - requires Sony 'Video-A' compatible TV for the enhanced mode; compatible with the Photo TV HD standard (which presumably your set supports).
I'm going to have to find a friendly local TV dealer with Sony in stock alongside other models and see if there really is a difference, and also see whether resaved or copied files are recognised.
The original question was whether .DNG files would be recognised, and they won't be, and what was the best format for storing files for HDTV showing (the answer is, as said, the orginal JPEG). And I do not know, and nor do you, whether the Sony Video-A system recognises files processed through IDC (it is already established that it may not recognise files processed by other programs). The HDTV preview is only stored in raw files, as far as I know there is no special instruction contained within JPEG files to identify the crop, that's done automatically. But the raw file contains a full size JPEG, an HDTV 1920 x 1080 JPEG, and a 1X preview for the rear LCD screen. When you zoom in on the rear screen, you are zooming in on an embedded full size preview, not the actual raw data; the same happens with your HDMI playback. It's the hidden 12 megapixel JPEG you are zooming in on. At least, that is what I have been told by Sony to explain the extremely fast review functions of the Alpha 700.
It is easily confirmed anyway by common sense - the preview even when zoomed to the max uses DRO, WB, contrast, sharpness etc. The raw file uses none of these.
To clarify for the original poster:
Your original in-camera JPEGs or RAW files will play back.
The Alpha 350 does not have an HDMI connector and can only play back via a normal video input from its USB/video port.
Assuming you shoot full size JPEGs, you will get the benefit of full zooming in. If you use smaller JPEGs you may not be able to zoom.
If the files are post-processed, the embedded HD image is lost (this should only affect the Sony Video-A function).
If you shoot raw, you also get full zooming in.
If you convert to .DNG you won't be able to play back.
You will see the A700 image best if you use a 1080p HDTV fitted with 'Photo TV HD' interface - 1920 x 1080 true pixel resolution - not one with a lower true resolution.
Colour, textural detail and shadow brightness will be best with a Sony Bravia equipped with Video-A (A700 only, not the A350).
You should be able to copy your JPEGs on to your computer, then back to your camera-formatted memory card, without loss of playback but some users have reported problems.