I too have bad pixellation with Dish on SD channels, actually I have the problem on HD channels as well. My local installer said that it is just the way it is and that there is nothing he can do. I tried to get Dish to send a different Tech out but they scheduled with the installer who doesn't know how to fix it. I got Dish 2 months ago and can't seem to get them to fix it and have kind of given up for now. My TV is a Toshiba REGZA 42 inch HL167. I am using an HDMI cable to and have tried component wth no better results.
If you find a fix please let me know becuase I am very frustrated with the issue. Sometime I can't even stand to watch a channel because the pixellation is so bad.