This sounds brilliant. My Philips telly has a USB port as, obviously, do all the PC's. DVD's are a pain in the backside as they keep getting scratched (bloody kids) and I don't see the point in BluRay as it suffers all the same problems (scratching, slow start-ups). This sounds like the dream solution to me. Be interesting to see how the DRM is managed with regards personal backups.
I'm not a free-loading thief, like many around here, but I do object to copy protection systems that prevent me making a perfectly legal backup copy and force me to re-buy or find "other" sources when the kids have been playing Frisbee with Wall-e.