Maybe Jeff Schewe can weigh in. In the newest LuLa LR tutorial he notes that images can now be printed at 720 in contrast to the previous advice. I can't remember if he was speaking about images from MF cameras or the smaller DSLRs.
Yes, Lightroom 3 can now upsample to a max of 720PPI and then output sharpen. It was put in because, well, I could get better output from my P65+ images in Photoshop because there I COULD keep the native resolution of the file and output at the dimensions I wanted. Lightroom 2 capped the resolution to 480PPI. So, yeah I kinda got the engineer working on the LR Print module to increase the cap to 720PPI.
As for why? If the native resolution of your file is above 480PPI at the final print size (and this will depend on your camera and print size) it's silly to waste the resolution and force a downsample (which softens) and then have to output sharpen.
Also, what I have found in my own work is that if the native resolution of your image is on the low side of the old 180-480PPI range Bruce Fraser said was useful, adding about 50% in pixel density (upsampling) can help the print when printing from Lightroom. You can do the same thing in Photoshop as well but it's not as easy/efficient. So if your image was at 200PPI at the final print dimension adding 50% (100PPI) in Lightroom would produce a better result for high frequency texture and certain high contrast diagonals or curves...
What I have not found is that taking an image with the low end of the resolution range and upsampling to 720PPI producing a consistently better result.
And taking image's whose resolution is already on the high side (360PPI and above) will not get much benefit at all. Upsampling to 720PPI won't hurt anything...but the returns do diminish. And, you are pushing a lot more pixels which means slower spooling although the actual printing speeds seem about the same.
This all presumes Epson printers like the 2880/3880 and higher. If you are printing to Canon or HP, the numbers to hit would be 600PPI not 720PPI.
I still believe in Bruce's old 180-480PPI range as being able to produce good printed output on inkjet printers...but printers, resampling and output sharpening have improved since he did his trial and error tests a few years ago. So, for images whose native resolution is already over 480PPI, don't downsample. For images on the low end of the range, some images can be improved by adding 50% or so. I do think it's important for people to avoid doing arbitrary resmapling of images to try to hit some magical PPI numbers though. The old saw of resampling to numbers divisible by the "native resolution" of the printers is, I think wrong-headed. And downsampling any image for inkjet printing is simply wrong. However, the same can NOT be said for halftone printing...for halftone printing sending too much resolution can actually produce inferior results...but that's a different discussion.