However, part of the HD-DVD and Blu-ray specs is the video encoding method and parameters, which absolutely do have a resolution associated with them.

 

Don't hold your breath for any dual-format players. Sony is being a huge bunch of assholes about it and has made STRICT limitations that to license the BluRay platform you MUST NOT support any competing formats. I believe NEC developed hardware that's capable of playing both, technically, but it's made as a cost saving measure, not the ability for a single player to play both formats.

 

Blueray and HD-DVD both use different compression tecniques to put a movie on the disc and I would assume that the compression format used may only work at 1080p. You could record the higher res. video but I doubt you could put it into the correct format.
I read that both formats are equal in terms of artifacts created by compression even though HD-DVD in compressed more. I also read that HD-DVD has better black and whites than blueray, but I find that hard to believe.
As far as using the X360 player on Windows Media Center - media center currently does not suppport playing any high definition content. You have to use a player within standard windows. Not until Vista atleast will HD work.