@Blackened144
Did your OEM player come uncrippled? My LG came with PowerDVD Ultra 7.3 OEM and is restricted to stereo audio only - so add $80 - $100+ for new software (oh, and PowerDVD Ultra 8 drops HD DVD support in the player, so add the cost of replacing those movies).
@HTFred
I believe the same happened with the VHS to DVD transition. There was a period there where DVDs were $20 or more and VHS bargain bins had them for only $5 - and people were saying you were crazy to switch. Velocityg4 echoes precisely this sentiment (by the way, the lowest retail I've seen was a week or two ago at Best Buy for $3.99 per DVD in their bargain bin, and many sales have been at the $6.99 mark).
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Although player cost is important, they could take a lesson from the console wars - cost per title and number of titles are more enticing. If history repeats itself, in two to five years the cost will come down and BD will be the mainstream.
As for the PS3 being an option, too many mass market consumers see it as a "game machine" and that will deter them from buying it even if it is a cheaper and simpler solution. Remember, its not about reality - its about image and perception.