i own two HDTVs and i still haven't stepped up to an HD movie format. DVDs are so incredibly cheap that i can't help but buy them. i regularly buy DVDs used each week and haven't paid more than $4 for one in well over a year -- my "sweet spot" is $2 and i own almost every movie i actually want (and yes, that includes recent releases i'm interested in). i also don't watch much TV at all, so while my HD sets are nice for the occasional TV show, they shine most with my Xbox 360s.
as for quality, yes, HD is a marked improvement over DVD, but it's still not significant enough for me. my personal analogy is that DVD is like a hot fudge sundae; HD is that same sundae with sprinkles and a cherry on top. they're both pretty sweet, but as it stands, i'm content with the bare bones dessert.
having said all that, i'm tempted to buy a 360 HD DVD drive since they're so dang inexpensive (what with all you're getting in the purchase), but even if i did, they wouldn't get much use until used movies hit the $5 dollar mark.
but OP, you still scored a great deal, and i congratulate you. i'm in the camp that recommends selling the thing and waiting a bit longer for the media prices to drop. either way, nice buy!!