all eps where filmed in HD but they where saved to SD 720x480 16:9 but then after a couple of seasons they changed to 35mm film so then saved the eps to to 1920x1080p but because fox only broadcast in 720p so there was no 1920x1080 but if fox broadcast in 1920x1080 and played the eps again we would have 1920x1080 eps
because of all the music that they used on Malcolm in the middle there will never be any other seasons besides session 1 on dvd as it would cost them way to much to get the copyrights for all the music/songs used
Welcome Widescreen, you are right in some ways wrong in others.
All the episodes where shot on film. Film can be converted (scanned) to SD (standard definition) or HD (high definition).
As far as we know only season 6 & 7 have been converted to HD. I'm sure the original film remains and therefore there could be HD releases of earlier seasons.
For some of the original broadcasts (and broadcasts to this day, depending on the channel) and the season 1 DVD the episodes where cropped to 4:3.
These where later re-broadcast in 16:9 widescreen.
Season 6 & 7 where broadcasts in HD.
We don't know what resolution the film was converted at, so they may have to re-do season 6 & 7 if they wanted to have 1080p HD.
You are correct in saying music rights issues are an issue for season 2, however we don't know if this effects later seasons and there may well be other reasons for the lack of DVD releases.