The Max allowed transcode resolution only applies when transcoding happens. I don't recall how the "Limit max resolution" actually behaves. But it can't hurt to have those set to 720p.
Jellyfin 10.10.7 (Docker)
Ubuntu 24.04.2 LTS w/HWE
Intel i3 12100
Intel Arc A380
OS drive - SK Hynix P41 1TB
Storage
4x WD Red Pro 6TB CMR in RAIDZ1