I think the bottom line will be, hardly anyone will watch `legal` HD DVDs on their PCs, it'll be strictly a standalone dvd player thing. Where as your PC will still be used to watch illegal stuff, decoded HD stuff in Divx/Xvid.
People like security on their PCs, but not enforced protections, people will speak with their wallets, people wont upgrade to vista, and the games that say they'll be Vista only, like Halo2, will realise they aren't gonna sell many copies. This might be ok for microsoft titles, as they can afford to make a loss, but for the likes of EA... No way will they produce Vista only games.