x2 I have hundreds of compressed movies using the iTunes 720 standard.
I use external Terra-byte Drives, DVI to HDMI, great index system for finding your movies, unscratched by your kids.
My Brother has the Bluray carousel 400 disc player, I can recommend that as a good way to go.
I have movies on Bluray, like "Avitar", "Fifth Element" ect..
I agree the Pixar movies like Wall-E are worth the Bluray experience.
Most movies are shot so poorly and ignore color altogether! DVD quality is fine for most titles. I say that, not that I don't care about quality, but because it's true.
Movies like; "Ben Hur" and "The Ten Commandments" are the kind of titles I look for. Technicolor! but try and find them.