Thanks fob67cry, but for some reason, I don't have a dropdown choice. My only options are deinterlace and Duration length. I'm not using any capture cards; just straight USB connection.
I did come up with a workaround though...
This is a free app that lets you stream live video.
I setup my Logitech C920 in CamTwist, and then open Arena. The webcam resolution is whatever was defined in CamTwist, so I can now see 1080p and 720p inside Arena, which is what I wanted
I appreciate your link. I'll have to figure out why I cannot see the Connection options for my video feed. Could it be the lack of specific drivers for webcams in OSX?
There should be a drop down menu in your clip preference pan where you can select the resolution. Check out this post: viewtopic.php?f=12&t=11133