Interesting that with a 720p movie in cinemascope 1:2.35 you only get 544 lines, which is kinda more like 544p
and with 1080p source in scope you get 817 lines
This is always true since there is no need to encode the black bars and if you zoom the picture to get your full 720 or 1080p then you are going to lose picture off the side. I would rather have the full picture.
What you're also missing is that the actual resolution, i.e. the size of the pixels, is exactly the same for 1280x720 or 1280x544.
Personally, I'm quite happy that they are going to sell movies in 720p. I would rather rent these days but there are always films you feel you would rather own. I have been through LD, DVD and even bought into HD DVD but haven't bothered with Blu-ray yet because the cost of the players has been too high here in NZ and the choice of discs too limited and overpriced.
I didn't want to go back to buying DVDs, in fact I have had enough enough of buying movies in general since I have so many that I just can't find the time to watch them, so renting makes perfect sense.
Picture quality of the ATV rentals is really pretty good. Even SD isn't terrible. A little softer than a high bit rate DVD but not too bad. 720p rentals are definitely better since they have roughly 3x the resolution of DVD and the colour is crisper.
Is it as good as HD DVD? Nope, but it is much better than DVD so I'm not too disappointed. Will I buy many? Nope, but when they start offering them in NZ I will probably buy a few so it is good to have the choice.
To all those moaning about it not being Blu-ray quality, well it isn't I agree. But it is better than DVD and more convenient than Blu-ray so it has a good shot. What I do know is that I can now rent a movie from iTunes and throw it up on my 100" HD projector and the experience is close to the local digital cinema down the road. Actually, my sound system is better since I have ribbon speakers and valve amplification, plus I get the best seat in the house and it only costs NZ$8 versus NZ$30 for my wife and I to see a movie.
A final note. I have to say that for the level of compression these movies have been through, they really look excellent. They don't suffer obvious posterisation and the fine details and textures are all there. They really are HD. Not 1080p but they are good quality 720p.