I think you are ignoring the other benefits of "next-gen" home video playback. It's not just about resolution, although moving from SD to HD will be a good step up for quality and marketing (expect marketing to focus on this aspect). The DVD spec is not just about MPEG-2, it's about all the media on the disc and how the disc is structured. Blu-Ray and HD-DVD will offer other features beyond increased resolutions that will improve products. Likewise, Blu-Ray and HD-DVD have other components than just the "exciting" H.264 codec and lossless audio. I think the Microsoft demo at E3 showed this quite well.
Expect interactivity options to increase and there is more room for bonuses. Even if the highest possible bitrates are not used for the movies themselves, you may get conveniences like main presentation and bonus feature on one disc. Another possibility is "box sets" like Band of Brothers on a single disc. Using XML and increasing connectivity would imply that even more data would be accessible from off-disc sources to complement what you are watching. Perhaps we can think of this as some form of mini-IMDB.com pertaining to the disc you are watching. The one thing I am a bit stumped on is that I haven't read that either format mandates internet connectivity for the devices. Making such a feature standard should be of primary importance IMO. Then it's a matter of whether people hook up or not, but I really think it should be there (maybe it is, but I haven't seen anything about that).
BTW, I am often confused why people cite higher costs for Blu-Ray as a mjor negative. Sure, the factories will have to re-tool, but didn't they do this already when moving from CD to DVD? Why should we, as consumers, worry about this aspect? Let them pay a little to reap their rewards. If you presented "DVD quality" movies on a Blu-Ray disc you could fit in much more content, elminating the need for multiple discs. This may not seem like much savings, but this also carries over to the shipping box (reduced size) and should be a win-win. However, the fact that you pay the same price for a DVD movie including a second "bonus" DVD as you would for a single disc should tell you that the discs themselves are not the main cost component.