Playstation 3 Blue Ray quality - How good is it ?

I have a LCD-driven 55" rear-projection HDTV by Hitachi, which accepts 480p, 720p, and 1080i. Its native mode is 720p, but somehow, the picture is just a *little* bit better when I feed it 1080i signal. We just got a PS3 yesterday, and when we set it up for 1080i output, it looked really good and I have no complaints. It certainly didn't demonstrate any slowness or softening compared to my Toshiba HD-D2 HD DVD player. I consider them pretty much equal in picture quality; eventually with the downloadable upgrades, the PS3 may surpass it. On the other hand, my 720p TV may have trouble revealing the difference.

Anyway, at $399 for an 80MB PS3 and having added Blu-ray to my Netflix profile, I'm very satisfied.

08-27-08: Cerrot
I was under the impression that the PS# did not do Dolby TrueHD or DTS-HD.

The PS 3 can read and extract the uncompressed codecs, but it doesn't decode them internally. This article explains that the PS 3 can read Dolby TrueHD and DTS-HD Master Audio from the disk and converts it to an uncompressed PCM bitstream which is output via HDMI to be processed by an HDMI-equipped pre/pro that can decode the uncompressed PCM bitstream.

That's the beauty of the PS 3's high processing power and Ethernet and wi-fi connections; whenever Sony adds improvements, they can be downloaded to the PS 3 to bring it up to the latest revision level.