I've seen Divx/xvid torrents of TV shows, and a 700mb file produces a very nice video. 1.5gb and you basically have a 720p recording. I've never watched such a file on an HD display, but on my 21" monitor, the latter was always flawless. At 700mb, I generally don't notice any major issues. Certainly nothing that's any worse than HD received via Antenna (better than any HD over Sat or Cable).

Isn't HDDVD and/or Blu-Ray using Mpeg4 compression?