So, for example, with Time Warner Cable, the widescreen HD On-Demand movies that are available to rent, are they broadcasting Blu Rays or DVDs now?

These aren't Blu-ray. These are 720p versions of these movies. The resolution and bit rate of these On-Demand HD movies is lower than Blu-ray movies, but significantly improves on SD DVD. Image quality is clearly between SD (480p) and Blu-ray (up to 1080p). My personal experience is that on my 42" screen, at my seating distance, these look just like Blu-ray for me. But, this is because I simply can't see the extra detail from 6'. Blu-ray on a larger screen or from a closer seating distance would be more detailed, etc.

The sound is limited to 5.1 Dolby Digital lossy sound. Blu-ray can contain high quality, lossless sound. Zero extras on the HD On-Demand items as well.

Still, I recently watched a couple of Bond films on HD On-Demand. It was free, and saved me the expense of buying the one movie, From Russia With Love, I was interested in from the recent Blu-ray releases. It looked great, with excellent contrast, color, and detail and featured a fairly engaging 5.1 surround mix. I'm sure to buy the Blu-ray at some point. But, having seen this on HD like this, I can wait before I need to see it again. I hope to pick it up on Blu-ray now when it drops in price in 6+ months or during a sale.

-beebs

What you must also understand is that Blu Ray and DVD are media formats. That means what kind of storage is being used. Just because something is in HD doesn't mean they are using Blu Ray. It's like asking if the music you download from iTunes is CD, cassette or an 8-track. More than likely, especially since it's On Demand, they just have the movie stored as a file on a server somewhere. Working at a TV station I can tell you that a lot of content is just stored on a server. Other than network shows (which just come down the satellite as they air), all of our programming is stored on a server which then plays the commercials, shows, etc. through a playlist. We also use tapes (yes tapes!) to record HD backups.

This may also bring up the question (as it's been brough up before) whether or not DVD can hold HD content (which many argued it couldn't). The only reason we have Blu Ray (or HD DVD or whatever other new format we may have had) was because DVDs can't hold enough data to get a lot of HD content. DVDs CAN hold HD content, just not a lot (unless there is some sort of great compression used). In fact, a friend of mine, who was editing our wedding, was able to upscale the video (since DV tape is actually higher quality than DVD, at least bitrate wise) fairly well (at least to 720p) then stored it on a DVD to play back on my HD DVD player. It worked great (except he messed up the audio codec). There's also a new format to store HD content on DVD that works in most Blu Ray players and is being used by several video cameras, though someone else will probably have to explain it since I'm just learning about it. Blu Ray is just a higher storage optical disc. If you wanted, you could probably hold data or even (gasp!) SD content on it, if you wanted (think an entire TV season of a show on 1 or 2 discs). But of course we use the high capacity for HD content (since that's what it was made for).

This is why I don't have cable or satellite. I enjoy HD material, but frankly the broadcast HD I have over-the-air can't hold a candle to the HD DVD or Blu-ray I own. Yes, more selection, but I'd rather save my money for renting or buying the movies I want than pay $100/month for gimped-HD broadcasts.

Of course, if Turner Classic Movies channel goes full HD, I might have to change my tune.

Beebs and Obidawsn:
So, do these broadcasted 720p HD cable movies have the same issues as when an Electronics Store would show off a Blu Ray (such as the video settings being on flame mode a k a super bright)? Can one adjust the video settings of a broadcasted movie on your tv in the same way that one can adjust the video settings from your own DVD/blu ray player?

I rented Sex and The City off HD On-Demand which was amazingly clear and everything (Sarah Jessica Parker's face even looked more ugly in this better video quality format), but it's just too bright and too crisp, almost headache inducing. If this is just 720p, then I'm not sure if I would want even 1080p, but then again, maybe it's just the video setting that's the problem?

I always felt that cable HD has been about on par in watchability with DVD. The macroblocking that's visible kills the increase resolution for me.

Same here. I was all excited when I recorded all 6 Star Wars films off HBO HD in OAR. Then I watched them. Every space battle explosion looked like it was built with Legos LOL.

To be fair, you would get a lot more with cable or satellite than just HD movies for that $100/month.

I think that BD>VOD (but how much better is a serious YMMV thing) >DVD.

Why wouldn't you be able to adjust your own TV? What kind of a question is this?

I agree that Blu-ray/HD-DVD > VOD > DVD, but all of this depends on the transfer. There are some good VOD transfers and some really bad BR transfers.

If it doesn't look right, do a quick adjustment on your TV or projector and you'll be golden.

I have AT&T U-Verse. Personally, I prefer even DVD to HD Cable. I find the picture to be susceptible to macroblocking and compression noise whenever there is moderate motion in the picture.

http://www.videoessentials.com/

Yikes $100 a month. Man I wouldn't have cable or SAT for that either. Not sure about your locals but here not all HD channels are full HD. IF there a rare case something is on locally I want to watch off-the-air I can(but it's far and few between).I like the fact that if I can't watch it for some reason when it's televised I can record it with SAT . For us the $55 we pay is well worth it,just my two cents.

As mentioned before, the video settings are set on your TV not on the DVD/Blu Ray player or your cable box. If you have a Blu Ray player, having the Video Essentials disc (as listed above) may be of some use in helping you make those settings. I don't have a Blu Ray player, yet, so I don't have one of those discs to see how it works. But either way, you could try playing with the settings until it looks right to you or you may even be able to ask for advice in here or the AVS forum by listing your TV model.