EDIT: Getting back to this, you should note that the result isn't softer or blurrier than the "original" version, it just appears like that. Actually the halo thingy causes the same effect like a sharpening filter, which basically creates halos around strong contrast edges, to INCREASE the contrast at these edges. This makes the edges appear more pronounced. A very cheap trick, since the quality really suffers from this (though it sometimes is used on commercial DVDs... and it's always put on the "con"-side in reviews).
EDIT: Getting back to this, you should note that the result isn't softer or blurrier than the "original" version, it just appears like that. Actually the halo thingy causes the same effect like a sharpening filter, which basically creates halos around strong contrast edges, to INCREASE the contrast at these edges. This makes the edges appear more pronounced. A very cheap trick, since the quality really suffers from this (though it sometimes is used on commercial DVDs... and it's always put on the "con"-side in reviews).