Since the xbox doesn't have blue ray, I was wondering if you could augment the video from a playing DVD with a visual diff of the HD version stored in the cloud? I'm not sure how much information you would need to add to make the picture look much better than the standard DVD on an HDTV.
If you compared the visual differences between the 9GB DVD and a HD master, you could probably derive a diff that could be about .5-1 GB compressed using modern compression techniques.
Take that diff and visually merge it on the Xbox, and I think you have something cool.
-Josh
Add your 2¢