As far as XBMC goes, the way I have been doing it is copy and paste the .m2ts files from the Blu-Rays to my HDD. The .m2ts file is actually a container which has all the audio streams wrapped up inside it (HD audio too, AFAIK, although I use DTS at best).

XBMC doesn't handle the .iso of the Blu-Ray (more specifically it doesn't handle the menus, and features such as BD-Live), so if this is a requirement for you, then your current solution is the only way I know of. Check out xbmc.org/forums though for more detail.

As for output to multiple displays, a central server is definitely a viable option. You'd have to have an "extender" at each of your displays. Check out the new motherboards with an Atom CPU and Nvidia Ion GPU. Supposedly people are getting great HD playback with those boards running XBMC Live (a stripped-down version of Linux so that it boots like an XBMC set top box).

Nice, but AnyDVD, XBMC for Linux (with an Nvidia GPU and VDPAU hardware decoding enabled), Aeon skinning (www.aeonproject.com), and a few Terabyte HDDs make this unnecessary to those of us who can roll our own.

And yes, XBMC can play uncompressed .m2ts beautifully. If you want to transcode to x264 in a Matroska container, it handles that with ease too.

M'eh. Nice toy for the rich, but for $3 I got this XBMC remote for my iPhone, and it's pretty dang good.
http://remote.collect3.com.au/

Make the app jailbreak-only. That's so much more "NIN" anyway...

Indeed. I was really blown away by the difference I saw when I calibrated XBMC to display without overscan on my 51" 1080i screen. As if Comcast's low-bitrate "HDTV" isn't crappy enough, we have overscan to contend with...

Indeed. This was one feature I loved seeing in 7, that I can't wait to see in Vista. Little things go such a long way.

m2ts container support is awesome, but the Media Center REALLY needs some sort of scraping/tagging feature (a la XBMC) to add cast/plot/boxart to our videos. THAT would turn some heads...

Released to market: 6 months
Workaround discovered by kids: 6 months + 1 day

I, for one, welcome our new Google overlords.

These instant-on OS's remind me of all the things Vista Sideshow was "supposed" to do. Since mini lcd's embedded in laptop lids haven't exactly been all the rage, maybe there is a way to use Sideshow as the embedded OS. Or, dual boot instant-on OS's anyone? :)