My Ouya looks very low-rez and blocky! It’s only displaying at 640×480! I can’t read the text in some of the video games because of how low of a resolution it is!
A low-rez issue is the fault of Android 4.1; The operating system that Ouya wrapped itself around during the time of launch. And unlike other systems such as embedded linux boxes and even Android 4.4 it lacks adaptable resolutions for displays that do not conform to the proper HDMI standards. Thus, you are stuck with 1080p – 1920×1080 , 720p – 1280×720 and finally the fall-back mode which is 640×480.
You will especially get this problem using HDMI <-> DVI connectors on PC monitors that do not support the two larger resolutions. Although 640×480 looks like total crap on the Ouya, at least it is letting you know that it works! Future versions of Android may allow for more customization resolutions however it is unlikely if Ouya will receive the proper updates through any official manner.
If you have a display that cannot display 720p or 1080p properly you’re only re-course is to either deal with fall-back low-rez mode, or get another display that can actually handle such resolutions.