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 10.10.3 (Docker)
Ubuntu 24.04 LTS
Intel i3 12100
Intel Arc A380
OS drive - SK Hynix P41 1TB
Storage
3x WD Red Pro 6TB CMR in RAIDZ1 (JF Library)