I have driven a 1680x1050 display with a VGA cable, so I imagine it could handle a Blu-Ray or HD-DVD 1920x1080p signal.
However, as Pressure noted, if the content is protected by HDCP (and it should be), since VGA does not support that standard, it will not display the signal at full-resolution (I believe it halves it to 960 x 540).
I have used a vga connection with my xbox 360 and HD DVD drive, it shows 1080p fine. i dunno about blu ray though.
So for example, if you had an external blue-ray player hooked to a Mac via and HDCP compliant cable, and the had the mini-DVI output on the Mac go to a TV via a VGA adapter as a mirrored display, I believe it would transmit the 1080p. No? Or does HDCP have a way to block such a transmission too?