Agreed...but...downloads will be in HD. I'm downloading a 1080p rental tonight on my Apple TV as a matter of fact.
However, nothing like watching a Blu-Ray disc! Can't be beat!
The fact about movies, compared to music, is that I don't care owning them, just watching them. I mean that you don't watch ten times per year "Citizen Cane" or "La Femme d'à cote ". So I rent DVD's at local store or I go to theaters. As a matter of fact, we will see very few Blue-Ray discs at local video rentals, or Blockbusters, in the meantime the downloading will get the market. Because for the majors will be cheaper to put online HD movies, rather then producing the same title in a new physical format.
I'd love to have all that classic movies of Criterion readily available like iTunes. I don't really need to built a physical collection of movies, unless I want to study some of them shot by shot, in that case a DVD, or even an old VHS, can do the trick.
Netflix rents the extended resolution formats, AFAIK. Never done it, since I am only lo-fi regular DVD-compatible here.