It's quite irrelevant that a display can display all the pixels in a blu ray. Next year when they release iPad 3 with retina display, it'll also be capable of displaying every pixel in a blu ray, but would you prefer to watch a blu ray on a 10" screen or a 50" screen? Size does matter. That's why people still go to movie theaters.
Bitrate of course matters, but a 10kbit bitrate on 1080p will be enough for most people if the bandwidth allows them to download it.
The BD nightmare will go away, because like I said, the next thing after Blu Ray won't make sense on computer monitors anyway.
A 10kbit bitrate on a 1080p would be pathetic. Perhaps you meant 10Mbit bitrate. Which is way WAY more than current infrastructure can offer (even you lamented on how slowly it was progressing) and way less than BD offers today.
As for your question of whether I'd like to watch a BD on device X with screen size Y, well I don't really care what it is called - BD is the defacto standard for video and if I'd like to see something on the road, then perhaps a retina iPad would do just fine. Even a normal iPad would be better for BD than for DVD.
A movie is a movie is a movie, and most of the time I don't care one squat whether it is in a home theater or just on a laptop, that depends on where I am and what I am doing. I don't even have a home theater.
Point is, DVDs are on the way out and I see a clear difference between DVD upscaled on my iMac and a ripped BD. Very very clear. It's night and day.
So I don't need you to tell me I don't appreciate any difference. I do.
A BD would look better on all current Macs than a DVD, or any of the streaming videos available (not in my country but in your world I guess)
It would even look damn fine on a retina iPad, but honestly that doesn't matter since it's way too small to watch video on anyway, IMO at any resolution or bitrate, so there I agree: size does matter and an iPad is too small.
But after a certain size, where it is convenient to watch video at all, then BD support would be fantastic (and rather obvious) because as I wrote before, a movie is a movie is a movie.
BD is only a nightmare for Apple, because they won't support it and a nightmare for Apple users, for the same reason.