I think you misunderstand. When I say releasing games at launch on DVD, I don't mean BR on a DVD-9 format. I mean simple DVD formatted discs. If the thing is backwards compatible, it will have to be able to read the old DVD format. No reason to think a game couldn't be put on it. This wouldn't even be unheard of, as quite a large percentage of PS2 games were on CD. (This includes my favorite Ico.
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The AACS point is somewhat more concrete. I've not followed it, though. From the way I hear it, Toshiba is basically backtreading on why they don't have anything released yet.
And the costs... I still don't believe it will cost too much more than the PS2 did. I would hesitate to say 400, except MS has already broken that seal. We'll see though. Hopefully they release a lot of information Jan 6th. (I don't remember where I saw that date quoted.)