on a 70in sxrd rear projection screen the quality is better/same as hi-def from cable...the difference between hi-def optical and xbox live is not as great as some are suggesting but no question there is a difference.
if i don't plan on buying it (not buying much if anything these days) and i just can't wait to get it through blockbuster online (or sometimes a last minute requirement for viewing material), i have no problem ponying up for the xbox live content (i love how you can start watching it when enough has been downloaded; in my case, after only a few minutes with a high speed broadband cable connection).
now what do i dislike about it, the 14 day expiration after download regardless of whether i started watching it or not and the 24 hr viewing window once you've started playback...but these are dicated by the studios, not MS
make it a little cheaper (or give me a blockbuster/netflix type pricing scheme), relax some of the DRM restrictions and i would probably jettison my blockbuster account.
JMO ... YMMV