First off, just want to say that I don't endorse this sort of activity, but I found it to be strangely ironic. Apparently, Blu Ray and HD-DVD have been cracked for some time now, and with the prices of blank Blu Ray disks and blank HD-DVD disks being so high, people aren't putting the backups on blank High Def disks. Instead, they are taking the ripped files and converting them into WMV-HD, and then putting that on either DVD9's or DVD5's, depending on the length of the movie. Then they simply put the DVD into their Xbox 360 system, and voila! they are watching Pirates of the Caribbean: Dead Man's Chest Blu Ray edition on their Xbox 360. You don't even need the HD-DVD add on for this. All you need is a regular Xbox 360 system.
http://www.youtube.com/watch?v=jB4RBsVCInA
How exactly do you squeeze 25 gigs or 50 gigs of movie information onto a little 9 or 5 gig dvd? By removing all the extras, using regular 5.1 sound instead of lossless 5.1, and converting the 1080p video to 720p. I haven't actually seen one of these myself, so I can't say how close they look to the Blu Ray or HD-DVD original, but suposedly it's really close. It will be interesting to see if this trickles down to the street vendors that deal in pirated movies. All of a sudden we'll see a spike in Xbox 360 core system sales, lol.