N.B. it's Component that offers HD-res, not composite. Not sure off the top of my head if the PS3 or your TV support 1080P on component but they will offer at least some support for HD resolutions!

I would try another cable first off. HDCP, video data and control data are all on seperate pins so you could have damage to one or more, but still be getting handhsaking data through, hence the TV seeing the ps3. Try www.cpc.co.uk for a very cheap one.

Also worth checking that the tv supports the resolution you are sending to it over hdmi.

Other than that, there are ways round it, but all will cost more than a component cable.

HTH
Chris