Blu-ray was expensive, and for a long time, as you said, the PS3 was the least expensive good quality blu-ray around - so many, many people bought it first on that feature.

To answer your questions:

A. Yes, having the Blu-ray on the PS3 I think is the single biggest reason Blu-ray won the format war. The DVD manufactures did not like Blu-ray as they had to buy all new equipment, where with HD-DVD they could transition from their current DVD manufacturing much easier and with a lower cost. They could have upgraded parts of their equipment and not replaced as much. Having in the PS3 gave consumers a lower entry point of Blu-ray.

In my opinion had Microsoft put the HD-DVD in the Xbox the war would have been over much sooner and with HD-DVD's on top. I think they saw streaming replacing it as soon as they got Silverlight at enough quality to enough consumers (around 08).

2) No, the war was not worth winning. The war was unnecessary - if Sony had agreed to allow Microsoft to write the code for accessing the HD format, as the other manufactures wanted, then we would have had one format. The whole war could have been avoided in what came down to a with a simple agreement. The manufactures, the producers and the consumers ultimately all lost in the war.

Like the Video Cassette War of the 80's Sony really caused the HD format war, but this time instead of sneak out their format first, they came later with Blu-ray after HD-DVD was on the market. The result was delayed manufacturing, delayed adoption by the production companies, and most importantly delayed adoption by the consumer of the two competing formats.  So now, many manufatures and consumers that chose the HD-DVD side have all this expensive equiptment they can't use - wasted money.

It pushed back the adoption of the new HD format by the consumer - while at the same time streaming improved.

I like my Blu-ray, and it some ways I'm glad it one. It has a bit more storage and I like how scratch resistant the disk are (HD DVD might be too, but I haven't held one.) However, I do realize Blu-ray is dead. It's an old dying media and so few people are buying physical disk - and why would they. I hardly buy one as I would rather just stream it, or buy a stream (the only exception is when a disk is so much less expensive – as streaming doesn’t get discounted as much.)  So few games use mulitiple disk that I don't that it matters. (I can only think of the Final Fantasy, and LA Noir - others?)

With streaming you can punch up your movie and watch it in excellent quality, you don’t have to search through your collection, move off your couch, and you want the movie you want, not 10 minutes of unskippible ads, that you have to keep fast forwarding on and other such crap (like a home screen that gives away spoilers and ruins the surprise.) It’s like being punished for buying a movie. I’ve compared blu-ray with 1080p 5.1 streaming on my Xbox 360 and the difference are negligible.

TL/DR: Sony won with Blu-ray, but it was an empty win. Cause it was an unnecessary silly and expensive war – and left the door open long enough for streaming to ultimately win.  And Blu-ray is dead.

Yes, without the PS3 'HD-DVD' would have had a fair shot at winning the "HD War", and Sony would have missed out on a percentage of royalties (Not that I expect this amount of money to be huge...).