I have an 8mbps comcast connection. I tried watching Waterworld over netflix/xbox 360 and the vidoe quality was horrendous! Netflix shows full bars when deciding the video quality, so I think that means it is sending me the best quality it can (for the movie). I know Waterworld isn't in HD but the video quality was WAY below SD. It was terrible.

My TV is a 1080p 58" plasma.

I love the idea of streaming movies over my xbox, but I can't watch movies with that low of picture quality. Hopefully the technology improves in the future to make this more viable. Hopefully sooner than later.