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I don't get this whole rebranding thing.  I mean we have only a year or so til MS announces the next Xbox, so why waste the time, effort, and money to promote your system as a multimedia device?  Most people already know that the consoles have more features than just playing games, so I just don't see the point.

As for the Blu-ray, no chance at all.  To do it, MS would have to release a Blu-ray player add-on similar to their HD-DVD add-on.  It would probably cost at least $150-$200, and barely anyone would buy it.  Next gen, though, MS will have little choice but to go wtih Blu-ray, especially if they want to continue to look like THE multimedia device to buy.