I have try out the WDTV units for 2 weeks now. In fact I have sold many units of it now and still have a couple sitting in my house waiting for delivery. Now I am not a dealer or anything like that, but I just help my friends purchase it and setup for them.
All I can say is that the WDTV rocks! It can play HD mkv files up to 1080P. When you say the quality can't compare to the Bluray, I fully agee with you, but I can tell you that the quality of mkv files can be damn good that you can't really tell much difference between bluray and mkv. With 1TB WD HDD that comes with 1000 movies/concert...i can tell you that this guys is going for quantity and not quality. I have a few WD 1TB Essential HD and I can only put around 200 HD movies in it. And those mkv movies that I have is only slightly inferior to bluray and i really don't mind at all.
I have a few 1080P mkv movies that is more than 10GB in size and I can tell you that the quality is absolutely great.
So the bottom line is that the WDTV can display FULL HD video with clear, sharp and details video if you have the right HD contents for it.
The WDTV does carry audio on the HDMI. For those who would like 5.1 or 6.1 surround, you need an optical cable. The WDTV can decode AC3(dolby Digital) but has no on board DTS decoder(common guys...this things only cost RM399) so you need a receiver with DTS decoder if you want to enjoy DTS sound.
The WDTV can also support multiple audio channels and subtitiles which can be turn on & off.
Besides that the WDTV can even play your favorites music and supports FLAC lossless audio for the audiophiles.
For the price and features...I think this is the best media player money can buy.
Nice review and totally agree with u - source need to be great i.e what u shit is what u eat..
Just 1 minus point - the gui speed is rather slow....