Well Blu-ray didn't avoid using VC-1 because of MS, in fact many of Bluray's early releases used that same codec, its a good codec for getting most with the least ammount of space, its great for compression, but it is in FACT a worse transfer then BOTH MPEG 2 and 4, I believe the early release of 5th element was encoded via VC-1 then later encoded MPEG-4 at to a much better extent. Sometimes VC-1 is Great, sometimes... not so much.
Hot fuzz was a badass movie :D and definately a good realease on HD-DVD, but the review that I've read stated that the city scape in london appeared washed out, yet the outsides where described as "vibrant" and nowhere in the movie did it reach a higher bitrate than anything put out on Blu-ray, ALSO the track released was 5.1 onry, so the features and film were nice, but the disk still doesnt utilize 7.1 NOT to say the disk is bad by any means, in fact it's been hailed as one of the best high def disks available, its just that the consistancy in movies on HD-DVD isnt always as good, in fact there's been numerous times where a movie released on both formats gets better ratings for sound alone on Bluray.
Oh and as for Kingdom of heaven, the supposed total disk space used was 42gigabytes! Not only is that a bunch for a movie with NO EXTRAS (wtf) but it wasn't the disk capacity, and it COULDENT be transfered to HD-DVD at that size.
Now as far as the arguement with hardware reading BD-J, from what I understand theres ONE player that couldent update that via firmware, the original Samsung, which is funny because samsung isn't even affiliated with Bluray as far as I know and if ANY of TOSHIBA'S players wouldent be compatible with TOSHIBA'S format, well I dunno >_> I think it would make me giggle... That and if you've heard about them producing the tripple layer? Hell none of theyre current players will read the darn things :D Firmware can't fix what your hardware lacks.