First off....Microsoft really could care less about HD-DVD or BluRay. Sony is the one living in the past here, hoping for the second coming of the DVD. Microsoft supports HD-DVD, but knows the future is digital and has no big stake in either format.
When will you see HD-DVD'ed 360's? When Microsoft can release it without scaring more than 1% of their target market for the low end models. Why?
The strength of Microsoft's position w/ the 360 is that they can compete on all ends of the market. They have the 'Arcade' 360, with the price of the Wii, the power of the PS3 and the best game lineup on the market. They also have their top line product, as powerful as the PS3 and priced less than its low end model (after the price drop coming in a few weeks). Would they sacrifice this to let some developer publish on a HD-DVD disk? Not going to happen.
Note something about why the PS3 is damned to failure....Sony sold over 100 million PS2 systems. The problem is that 90% of those were sold at under $200. When will the PS3 reach $200 at a break even point? Never.
Now, some reality on the Wii....its attach rate sucks. The fact is that the system is selling to fans of Nintendo, just like their previous consoles. This isn't a revolution, it's a fad. 3rd party support isn't based on the potential, but rather the ease of porting an old game or game engine to a 'new' (old) machine.
So what does this mean? The Wii is a underpowered niche-fad with an attach rate that proves its market is the Nintendo fanbase alone, just like the Gamecube. Sony has squandered dominance to shill launch day obsolescence, in search of past glories, with a new disk format that nobody wants. Microsoft is gifted another market to lead, by giving what the market wants.
People will disagree with me. Tell me I'm wrong in 3 months, and again in 6 months. You'll see, and trust me I'm no happier than you are.