That is true. iTunes and iPod needs to be updated to DVD quality. It's past time that they update them. This is just as retarded as letting the ITMS stay at 128 kbps bit rate for so long. They should have been 192 kbps or better from the very beginning. And eventually they should stop charging a premium on HD content. It's not fair. Digital broadcasting is going to be a standard straight from the government starting next February. If the government is mandating it, then Apple should be ahead of the game in this regard; if you market yourself as a quality product, then put out a quality product. They charged extra for a higher bitrate on music, and that was wrong too. Should have never happened. Luckily, Amazon's low prices forced iTunes to lower the prices on iTunes+ tracks to 99 cents.
I have bought two movies from iTunes and both of them have awful quality: Pirates 3 and O Brother Where Art Thou. I'm thinking of ripping Pirates 3 and deleting the iTunes one. I got the DVD for Christmas from family members but I could not wait so I downloaded it from iTunes the day it was released. As for O Brother, I downloaded it as an experiment. Luckily Pirates 3 is much better quality than O Brother, but still crap compared to the rip I have of Pirates 1 and 2 for instance.