The Blu-Ray format is good enough to be shown in a cinema projected onto a 20 foot (or larger) screen. Obviously the quality of the BD itself would determine whether you would show it in a cinema, but many cinemas do show BDs when DCPs are unavailable. DCP has better colorspace, better contrast, etc. But it's still limited - the video is limited to a maximum of 250 Mbit/s. On Bluray the video is limited to 40 Mbit/s. If you have a Dolby Digital TrueHD track than the maximum video bitrate is 29.36Mbit/s. However, it's important to note that Blu-ray can use H.262/MPEG-2 Part 2, H.264/MPEG-4 AVC, and VC-1 video encoding. DCP cannot use any video encoding - DCP files are made up of thousands of Jpeg2000 images, the images are in a container file but they're still just images. That is to say, they can't use information from other frames to represent information in the present frame the way that video encoding works.
I saw a movie last year in a cinema, and for one scene it was pixelated as if it had been up-scaled from a standard definition source. What was even stranger was the fact that the shot was non-continuous (there were a couple of shots breaking it up) but that entire specific shot, and only that shot was horribly pixelated. Obviously that can't be a result of Jpeg2000 compression, so I thought it must be in the source. Yet when I saw the Blu-Ray there was no pixelation in that scene at all. Somehow the DCP had a problem in it!
Audio is another matter. Blu-ray arguably has better quality audio than is presently possible on DCP. DCP only allows LPCM audio, the maximum sampling rate is 96 kHz. Yet the maximum Blu-ray sampling rate is 192 kHz.
Now with that said, Blu-ray has other limitations. You can have a 24fps, 25fps, 30fps, 48fps, 50fps or even 60fps DCP. Blu-ray only supports interlaced for frame-rates other than 24/23.976fps and full HD. So you have some films like Wallace & Gromit that are available in full HD, but play at the wrong speed. Thankfully all of these issues have been addressed with the Ultra-HD BD specs. It also has a maximum bitrate of 100 Mbit/s, so video quality should at least equal what is possible with current 2k DCPs.
Yes it will be a niche format compared with Digital. But high-end audio/video is always a niche format.