This is silly. If the manual states that the WD TV Live supports 480i, it means it should be supported. It doesn't matter if the support comes from composite or the support comes from component. Otherwise, the manual would state that 480i is only supported via composite.
This, in turn, would result in some very studious user to sue WD for breach of contract or false representation. Either future manuals should be changed or the firmware should be changed to reflect 480i is only supported via composite. In the meantime, should any TV be harmed by the improper wording in the manual, then it would go without saying a class-action lawsuit could ensue.
This is what the manual says:
Video output resolution includes 480i, 576i, 480p, 576p, 720i, 720p, 1080i, 1080p
HDMI Best (up to 1080p) Specialized, high-definition connector
Component Better (up to 1080i)
Composite Good (480i/576i)
I think you would need a good lawyer to argue over this one. It does not mention anywhere that 480i and 576i are supported by component and therefore nothing false is being represented. Its people who are assuming things without checking. I cannot see how a TV is actually harmed by this but it all sounds good and scary.