I could definitely see them offering videos in the future, this is all just a test for the inevitable movie store coming later on.
As for H.264 and scalability: the codec as such is scalable from 3GP to HD, but an individual file obviously isn't scalable. A 720p file will run on a G5, but there's no way in hell it'll run on an iPod. But then again, Apple wouldn't need a 720p file for an iPod. They'd have something like the PSP res (480x272) for a portable player. Maybe even 720x405 (ie. DVD-res) if they want to be cutting edge. And a file like that might be playable on a future iPod if they have a custom chip made for it.
I doubt they'd distribute HD-files just because they'd be so effing huge, it wouldn't be cost-effective for quite a while.
As for video-playback in iTunes, does it only work with iTMS-videos? I've tried adding my own music-videos, they'll show up in the library, and I'll get audio and the first frame under album-art, but I don't get any video.