I think they are trying to get the HD stuff down 1st, *then* they will work on SD upscaling. (Hopefully.) Then they will add SACD and DVD-A. (Hopefully, but I think that's unfortunately doubtful.)
But I also don't think there's any "redirection" going on at all. Nobody's forcing anyone to buy BD vs DVD.
And when every day in the local paper, there are Frys Electronics ads for DVDs as low a $3.99, vs the fairly common $24.95 (minimum price) for new BD's, the answer I think to most people is quite clear.
And when rented DVDs play fine, and rented BDs pause, freeze, and crash, I think the answer to most people is quite clear.
Even DVD players were pretty expensive when they first came out too. The manufacturers do have to recoup their development costs.