Jedi_Wookie
Your understanding of HDMI, High Definition capable sources and High Definition video formats seems to be on a par with my understanding of Jedi's and Wookie's
HDMI is an interconnect standard - it can transmit Standard and High Definition Digital video signals along with Stereo and Multi-channel Digital audio along a single cable; importantly for the Movie industry it also adds Digital Encryption (HDCP) to the signal being Output on an HDMI socket to stop folk making unlicensed copies.
High Definition (HD) video comes in a fair few formats already with more to come in the future - currently the formats that you can access include the likes of WMV HD (see
http://www.wmvhd.com/ ), DivX-HD (see
http://www.divx.com/hd/ ), MPEG4... ; there are lots of HD codecs and not all HD capable players will decoded every format.
HD video can be delivered over the Air (Satellite), over a wire (Cable), on a Tape (see
http://www.dvhsmovie.com/) on a current generation optical disc (DVD-Rom) plus there are new blue laser optical disc formats coming out of Japan in the coming year or so (HD DVD and Blu-ray Disc).
Up-conversion - a DVD Video disc that's R1 carries the Standard Definition (SD) movie in MPEG2 format at 720x480 pixels and an R2 SD movie in MPEG2 format at 720x576 pixels. Some DVD players offer you the option of up-converting the MPEG2 video stream to 1280x720P or 1920x1080i pixels - which can be useful if your Display handles the up-converted signal better than the Native format of the disc.
Up-conversion nor HDMI guarantees you a better image compared with playing back an SD movie on a DVD player not equipped with HDMI and not equipped with video up-conversion - choose carefully and one or both feature may pay dividends but nothing is guaranteed.
HD for many will be delivered via the web, a home network and a networked Media Player and not via one of the new optical disc formats (HD DVD and Blue-ray Disc) - as others have said these new formats are not going to be inexpensive, they are currently not compatible with each other and the price of the Discs also looks like it could be quite costly.
Networked Media Players that are HD capable are already available and are relatively low cost compared to what we know about HD DVD and Blu-ray Disc players - some of the Networked Media Players that are available now will play your DVD Video discs, offer you Progressive scan Output and up-convert to 720P and 1080i over both Analogue and Digital Video Outputs and are not that much more expensive than the entry level up-scaling DVD players your already considering; see
Product feature : SnaZio Net DVD Cinema HD
Best regards
Joe