Regardless of one's preference for Blu-Ray or HD-DVD, neither is really necessary. A 1080i x264 encode sized to fit on a DVD-9 looks quite nice, but the problem is, unless you're running a dual-core machine, you won't be able to play the damn thing. The only way you'd be able to watch it at 1080 would be to reencode the H.264 TS (Sky HD utilizes H.264 compression, rather than MPEG2) to MPEG2.

For the vast majority of people, 720p is as high as you can go while utilizing H.264/x264 codecs, and a 720p encode of the Star Wars films looks great even when squeezed down to a DVD-5.

So Dunedain, seriously, at 20 to 30 bucks a disc, using Blu-Ray discs is stupid...not even accounting for the cost of the damn drives. If you want to play with bigger files, just use a hard drive.