Some things I've gleaned from this conversation, and one thing missing -
In the US market there is now a large incentive for blu-ray, but the global market says otherwise. Europe is very pro HD-DVD and other countries will be enjoying the benefits of it as well, especially considering its low cost of production, and the ease at which companies can switch production methods.
Overall the quality between the two is a moot point, as it's entirely dependent upon the encoder to do the right job to make the movie look good. We've already seen that both formats can produce excellent quality movies, which makes the next point also moot - capacity. Even without the addition of the three layer HD-DVD discs, both formats can produce the same quality within their alotted spaces, with all added bonuses, etc. No more space is truly needed.
I've always backed HD-DVD as there are fewer restrictions, it's not Sony (sorry, but their track record, for me, is not something I enjoy), and is generally a more robust system. It's also, in general, a cheaper system to purchase and implement. The problems, esp. early on, with Blu-Ray, and the fact that the public has, as yet, not been compensated for suffering early adoption, has prompted me to further back away from Blu-Ray.
I like the idea of digital distribution myself, but I always always prefer a tangible product. I still buy CDs, then rip them and have all the music on my media center computer. I also purchase DVDs and do the same. I have a few HD DVDs and have done the same with them. It's very nice not have to change discs when you wish to switch movies, shows, etc... I also like having the wall of boxes that house my discs, which will not receive scratches due to this. And before you flame, yes, I'm VERY aware that very few people, esp. those less technically inclined, are likely to go to this extreme. The point is, all of this is made VERY difficult for the consumer, and thusly, only tech savvy individuals such as myself are going to go through with this.
And therein lies my biggest complaint. I like HD-DVD as it is the lesser of two evils, but it is still an evil no less. I really would like to see both formats fail, and for the CONSUMER to actually have a say in this matter - allowing us to purchase discs that don't have so much copy protection crap on them as to make them sometimes unplayable on some players (blu-ray thank you), or just to require just an incredible amount of hardware because of their copy protection as to drive the cost of the players so high as to make it prohibitive.
What we need is a physical product that allows us to copy to our home PC (or player for those not wanting to have to mess with full PCs), the movie, allow for smaller, more portable versions to be copied to additional players, etc. allowing the consumer to have the collectable product, and do with it what they want, and even making it easier for the consumer to do those things.
I wouldn't mind seeing HVD's with a dozen copies of the same movie on them, all in different formats each with the ability to copy to whatever player we want. Perhaps a better, solution could arise beyond that, but that, to me, seems to be the fastest, as copying at 120MBps is much faster than reencoding the video from one media type to another.