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1) Prices might not fall as fast as they are now, but they would fall (especially in time for Christmas).

2) You are just flat out wrong there. If more people had HD TV's that might be true, but the HD saturation isn't anywhere near high enough to start phasing out DVD's yet.

Also, here's the largest reason it absolutely sucks and even if your two reasons weren't crap this one would still outweigh: unless you buy into both formats you're always going to be missing out on movies. As long as there's a split in the studios everyone who buys into an HD format and doesn't have both will be screwed.