Thax, good theory. Sounds good and well thought out.
Anyway, I'd like to point out that if HD-DVD is included in the 360, it would be a huge blow to Sony. It would most likely be the first format adopted, leaving Blu-Ray in the dust. Plants would have already been converted to manufacturing HD-DVD and there would be dedicated players for them. Plus, Blu-Ray woud be more expensive when it comes out in players, also causing it to fail.
$.02