good question.
i think beauty is in the eye of the beholder
To me, I haven't seen one iTunes HD movie which has awed me with its quality. I've seen some BR rips which are far superior. my BR player does a good job of upscaling so DVDs are good.
But BR discs are the cat's meow for me personally. I don't own many and don't rent often, but when I do, I enjoy not just the video quality, but I find the audio much better than anything else - especially for action flicks.
I think we are treating movies like music - willing to sacrifice some quality for convenience. Not a criticism, just a fact I believe to be true.
Again for me, this is true as I'll rip some of my DVDs to watch on my mac pro b/c i have a dual screen set up while I work. Movie on 1 and work on the other, or i'll toss them on the ipad and watch them when I can.
Cheers,
keebler