last time I heard blu-ray was still using the Mpeg2 codec for encoding and decoding there media as for HD-DVD using a more advanced codec with far more superior video quality.
Blu-ray and HDDVD players handle the same 3 formats - MPEG2, MPEG4-AVC (h264), and VC1. So that shouldn't be a deciding factor.
There is some argument about which is the best quality when you have lots of bandwidth (eg >20Mbps). The nature of MPEG4 makes it great in low bandwidth situations as it is more aware of motion than MPEG2 and uses that in compression. Some research is saying that when you get high bandwidth, this same nature of compression leads to unnecessary blurring.
I personally haven't seen a comparison.
If you're right that Bluray producers are only using MPEG2 that may be a reason - or perhaps the producers are just being lazy. They've got more space than they need, and they're simply using it. It's also taking advantage of the systems they've refined over many years (and which are still used in HD FTA transmissions).
So for me it all comes down to
1) does a movie need that space? (or will it in 5 years time?)
2) does it cost significantly more to make one of the disks?
3) does it cost significantly more to make one of the players?
4) bigger is better for computer storage
in reality in comes down to
5) politics - which format gets the most backers?
I wouldn't mind being able to burn MPEG4-AVC to regular DVDs for now to increase the quality and length (... provided it's played on a player that can handle it... can HD-DVD and Bluray players both play newer compression from today's DVD formats?)