Not legal and not close to blu-ray quality. The 360 is only specced to decode upto 10mbps vc1 encodes. It can handle 12mbps and is capable of handling spikes upto 15-20 mbps but you risk stuttering.
Blu-ray is specced for max 54mbps sustained data bitrate, 40mbps for video, 8mbps for sound tracks and the rest for subtitles and control data. It can go over is short burts as well, for example a scene in pirates of the carribean has a video bitrate of 48mbps. Most blu-ray movies sit in the 20mbps range for normal scenes and go upto to the mid and higher 30's for action scenes. DTS HD MA and Dolby True HD usually sit around 5mbps. (DTS 5.1 is max 1.5mbps, dolby digital 5.1 max 640 kbps)
Why would they put the extras on a 2nd blu-ray disk if the movie on a dual layer disc is only 12gb? Those are not the original blu-ray isos.
