Wow, a lot of varied information in here, so let's cut to the chase...
BD is superior in both video & sound. Video because it's max standard has the muscle to play a level of (non) compression beyond what
TV3 can play. Less compression (and there are NO "uncompressed" movie or TV show BDs- they're all employing compression) = less pixel detail getting thrown out and then reinvented by the system when it has to put the picture back together again and send it to your TV screen.
Less audio quality because the best surround sound the
TV3 can muster is the 1992 standard- Dolby Digital (much progress has been made on newer, much better standards since way back then).
There's also 2 kinds of answers flying in this thread with regards to
TV video files: iTunes video is not necessarily as good as
TV3 can play. Instead, iTunes seems to be someone choosing a "good enough" quality while also attempting to balance total file size (probably for some smoother streaming objective). A little over-compression and the file size can be smaller, smoothing out the stream for people with slower internet connection and/or reducing the delay before it starts playing.
The other option is to buy the BD and rip your own video from it. It's a fairly big job to get it exactly right but then you can target maximum quality playback for
TV limits rather than targeting smooth streaming. So instead of a file size at- say- 2GB-8GB, you might end up with a rip at 8GB-20GB. What's that get you? Much more picture detail stored in the bigger file.
TVs specs still cap out well below what the native BD specs max, and there's always a generational loss in the rip. But, if you go that way, you can make your own choices about quality and end up with something in which it can be very hard to notice a difference (BD vs.
TV) visually (you can't do much about sound- DD must be "good enough" or it's a bust).
And then there is the fact that
TV is making everything 30fps, where BD will respect the film's original shoot of 24fps. This again involves the computer "inventing" the equivalent of the 6 frames per second to "adjust" it to the 30fps that
TV wants to output. Native is native so one needs to decide for themselves- with their own eyes- if this is a choice-maker or breaker.
So OP, there you have it. If you are a video and/or audio purist, your only choice is BD or better.
TV is a downgrade but it depends on where you draw the line if you can "settle" for that downgrade in exchange for the other benefits that come with
TV. And if you roll your own- that is, if you're willing to make your own files rather than buy iTunes- you can make them good enough that it's pretty hard to see the difference. Personally, I wish Apple would quit the "hobby" and get serious about the little box, making it at least hardware toe-to-toe with BD players and licensing the audio options to "catch up" with modern sound formats.
