THere's no possible way they'd abandon Blu-Ray on PS3. If for nothing else, it's an anti-piracy measure.
And if the PS3 launch is DIsmal, the 360's launch was even worse, because they barely managed to move 600K in the same time periode last year, 40% less than Sony managed. It's simply people piling on, and in this case HD-DVD fanboys.
A sub-$200 HD-DVD player? Either they'd be losing PS3 size numbers on it, or it's just bull. Given that just the drive with a USB cable is $200, it's impossible for Toshiba not to lose their shirt and ship it with the RAM, Processor and video power to play it.