I don't think anybody in his right mind would argue that a straight transfer from a 10+ year-old laserdisc is going to beat the picture quality of a DVD. So on that point, OCP is probably right in saying LD is dead. Assuming, of course, that LFL is planning to do a decent job of downsampling their 10+ year-old digital master tape.
However, what I feel characterizes the X0 Project best is not its laserdisc source, but the level of quality being brought to whatever best source is available. I don't think that sort of attitude is obsolete; I don't imagine the information the Project has been able to dig up is wasted; I don't feel those involved have been "owned" by LFL through this announcement.
What I expect will be true of the X0 Project is that continuing to work with the LD source for the time being (there's nothing as true to the original film at the moment, despite its overall lack of resolution) will be excellent background information for when the new discs arrive in September. The X0 Project has long alluded to the fact it's got good stuff at its disposal beyond just an excellent LD cap. I know they're working with TooT, for example. I'm convinced I recall posts made here referring to HD (as in "upsampling to"). I believe the site at some point mentioned comparing colours to actual film frames. All of these things, and the Project is still dealing with LD? There must be a reason, beyond a blind allegiance to a dead format.
I have every confidence whatever happens behind the scenes at X0 headquarters is about as state-of-the-art as enthusiasts can get. I suspect I'm not alone in that confidence. About the only posts I've seen not expressing some similar level of confidence are those made by OCP, whose posts are increasingly coming across as very sour grapes. Not very becoming of someone who's done good things for the fan edit scene, and I wish he'd stop.