BBC HD is already being broadcast over Satallite, as is Channel 4 HD. ITV will probably get around to it eventually.
At the moment BBC HD normally only broadcasts a few hours of actual TV a day, the rest of the time just being preview, but as they have a greater stock of HD footage that will no doubt increase. Have enjoyed Torchwood in HD for example. Dr Who on the other hand is SD only, as all the special effects are currently done in SD to keep the costs down.
As for HD "Freeview", dont hold your breath. The current government wants to sell of the frequency band currently allocated to "Analog" to the highest bidder (Mobile phones anyone?). There is no guarantee that it will be assigned to television. In which case freeview will remain squeezed into a rediculously small bandwidth. (Although interestingly, BBC and other broadcasters are researching a tech which uses two transmitters on the same frequency but at a different angle.. Anyway with a special reciever it may well be possible to have HD terrestrial freeview with the current frequency allocations!). But you will need two antenna to pick up the separate transmitters (Or maybe a special antenna which is two in one)
Is your friends HDTV an LCD panel? What about your SD Set CRT maybe?. Some HD panels are lousy at SD resolutions, especially LCD's. Plasma's on the other hand are generally much more forgiving of bad sources while still being great for HD. Part of the problem is down to the scalers though. Panasonic, and Pioneer's TV's both have really good scalers, so they make the SD look nice. Some of the LCD panels would look much better if the TV's internal scalers were better.