If I ripped my own collection on to a HTPC I would still have to hang on to all the originals, however I use Meritline 500 hanging file cases along with storing the disk art in binders, saved a lot of space.
I ripped my Blu-Rays on my 12-Core Mac Pro, used Handbrake (spent ~6 months studying codec's, advanced strings, multiple audio tracks - iDevices default to the first track which must be stereo, the rest DTS/5.1/7.1 Auto-Passthrough and handbrake supports DTS in M4V/MP4 containers for a while now so no need for MKV), and they're fantastic! I setup my Pioneer 50" elite, Samsung 50" LED 3D and compared a Blu-Ray disc to one my my encodes, very little difference. I tossed them after. Although it took a long time (most Blu-Ray Handbrake encodes took 7-8 hours, I let each run overnight), they're about as future proofed as you can get and the advanced strings compressed them to about 8-14 GB's an encode. Copied them to my Synology server with a Mac Mini running Plex, love it.
Apple 1080P's are a joke in comparison. Until the average consumer can get 50Mbps internet, they'll have to be. Until then, while SD DVD's may be fading, Blu-Ray (esp DL 50GB BD's) are essential for me and a lot of others I know.
It's not "night and day" at all. Did you read ArsTechnica's comparison of iTunes 1080p quality vs Blu ray?
One study which many in the industry called into question. Believe me, if you know what you're doing, there is a huge difference. Aside from the picture quality, the lack of DTS and true Blu-Ray sound is a big issue. My Handbrake encodes support DTS and about every audio codec.