Short Version:
Q: Can you run an XBox in “progressive mode” on a “low res arcade monitor”?
A: No.
Long version:
You’re mixing up marketing and engineering terms. That’s dangerous territory that can result in damager hardware.
Monitors measure outputs in frequencies.
A “standard resolution” monitor (in arcade speak)is a 15KHz monitor (you would probably call this “low res” today). This will allow you to send signals roughly 320x240@60Hz to a screen in progressive scan, or 640x480@30Hz interlaced scan. All interlacing does is send the odd lines out of your frame in 1/30th of a second, and then the even lines from the same frame in the next 1/30th of a second, giving the illusion of a higher resolution image hitting the screen at half the framerate.
(Obviously there’s almost no limit to the resolutions/refresh rates that can be sent to a 15KHz monitor, as long as the resulting signal is always 15KHz)
A “high resolution” monitor (in arcade speak) is a 31KHz monitor. It can take a signal of 640x480@60Hz in progressive scan (and again, other resolutions, as long as they are 31KHz).
Now that’s the tech. The market speak is a little different. (Understand that marketing people are rather stupid, and use tech terms incorrectly almost all the time).
In marketing speak, “progressive mode” is 480 lines drawn progressively, or 640x480@60Hz, or “VGA” resolution. To do this, you need a hi-res monitor capable of 480p input. A standard-res arcade monitor WILL NOT take this mode. It will either not display it correctly (sync won’t match, and you’ll get weird lines everywhere), or worse: it could damage your monitor.
240p is also a progressive mode, and is most certainly what CPS2 and CPS3 boards spit out to standard-res arcade machines/monitors. However this is NOT the “progressive mode” that marketing people talk about when referring to XBox output resolutions.
When outputting 480p modes, signal quality degrades quickly over poor cables. You need properly shielded cables that can handle these modes, which is why component and/or VGA cables are a must.
Component and VGA both send a 480p signal from an XBox. Component sends a YCrCb signal which is useless without a transcoder (but can be done if you happen to have something like the X2VGA)
Getting native VGA out of an XBox is possible, but requires a modded console if memory serves me right. Someone correct me if that’s not right.
If you want to learn more about how monitors work, I suggest you read this from start to finish, twice:
http://easymamecab.mameworld.net/html/monitor1.htm
It explains modelines, frequencies, “resolutions” (no such thing on analogue monitors remember) etc, etc. It will also save you blowing up expensive arcade monitors too.