I think most people can tell the difference, but I also think people don't care about the difference. Increased resolution on the iPad (which can only run one process at a time) really isn't that pressing of a concern.

It's the same reason many people find DVDs adequate for movies. It's good enough. Yes, blu-ray is higher quality, but you can only really "notice" when they're side by side and get used to the quality you're looking at.