[quote name='rsigley']i can download and extract a 700 mb dvd rip in about 4 minutes if i download it off of newsgroups[/QUOTE]
That's about 3 minutes too long for me.
Plus, digital downloads are going to be full of DRM it will make current AACS, BD+ seem weak. They (the publishers, manufacturers, owners of the copyright, etc) might even be pushing for DIVX like model, where you have to pay to play or delete them selves after x number of hours or days. They will have much more control over the media then ever before.
With digital downloads, the consumers will lose a lot of the freedom they currently have with owning a physical copy. How are you going to bring that copy of whatever over to your friends house to play? BD+ may not be completely cracked now, but it will be. AACS already is.
Also, you internet speed is not typical of most. It will be a long time before middle America gets such speeds and with bandwidth caps starting to be considered an option for some providers digital downloads won't be taking off anytime soon.
Looking at the iTunes Store, it looks like most providers only want to sell at normal physical media price. With 720P 2.25 times less pixels, DRM, less control for the consumer, and no physical media, digital downloads are a rip off in more ways then one and being setup to fail from day 1.