LCDs can have far, far better contrast ratios than any other technology, they just need to move to active backlighting.
Check out the brightside (now bought by Dolby) displays, they are the way of the future and will bring unimagined quality.
http://www.bit-tech.net/hardware/2005/10/03/brightside_hdr_edr/1

I saw this unit early last year, and nothing, and I mean *nothing* compares. you will never want to watch any other kind of display after seeing one of these in action. I just hope that via dolby it will now get licensed and make its way into consumer products, because OMG the picture is just astounding.

There is *no* difference between 1080i and 1080P unless you have a crappy TV.
None. at all. Zero. Zip. Nada. Nothing.

The HD-DVD disc has 24 frames of 1920 x 1080 pixels stored for each second of the movie.
For 1080i it sends one half of the frame (1920 x 540 pixels) and then the other half of the frame (1920 x 540 pixels). If you have a progressive scan HDTV (i.e. not an old CRT model) then it puts the two halves of the frame together *and displays them at the same time as a full 1080P image*. If you send a 1080P image from a player it displays the *exact* same image as comes from the 1080i player.
Some TVs screw this up, but decent ones do not.
So unless your TV is somewhat useless there is literally not one pixels difference between a 1080i signal from a progressive master (e.g. a HD-DVD movie) than a 1080P signal from a progessive master. (e.g. a HD-DVD movie)
The only time 1080P looks better than 1080i is if the source material is 60Hz interlaced, and then you get a totally different situation where the resolution really is compromised (e.g. live sports telecasts etc.), but this has no relevance at all to a HD-DVD player.
So once and for all, 1080P is nothing more than a 'tick box' extra feature for most people, there is no quality loss in 1080i vs 1080P unless your TV is useless.

Being able to put out Hidef in 24 Progressive frames per second is another thing altogether and can remove judder which is a great thing, shame most TVs don't support 24P.