The movies at around 1gb are below SD encodings (assumably in h.264). For HD, which you can only get on the AppleTV, I imagine the files are considerably larger - 2-3gb I would guess. To give you an idea of the compression, I found this flickr pic of a DVD vs iTunes Movie, the image dimensions say it all though - iTunes is selling movies that are 640 wide, and not PAL's 720 pixels wide. The compression/softness is pretty obvious too. I think I just sold myself out of wanting to even try it.
iTunes -

DVD -
