On a 26" HDTV, no, you're not going to see much difference. I'm not sure what the TV means by saying it's "HD-ready"; could either mean:
A) It needs a set-top box to receive over-the-air broadcast HD signals
or
B) It only has component analog and not the newer and better HDMI connectors to pass true-HD 1080p signal. I bet the TV is a 720p, lower-res than blu-ray's 1080p, and, with that small screen size, the only real benefit you're seeing is the 16x9 shape of the picture.
At least a 42" with HDMI connector will give you some semblence of the full 1080p picture from blu-ray disc. I've got a 60" and the picture is very sharp, but not quite as cinematic as movies in a cinema. My next HDTV will be a 70".
"To look truly amazing a movie would have to have been filmed with high definition cameras. Most older movies don't look that much better but many blu rays have DTS sound which is much better. You would need a surround system or a receiver with DTS for this."
vbel is a bit misinformed. "Older movies" were shot in 35mm film, triple the resolution of 1080p HD, so, the quality of the lenses and the grain of the "older" film-stock nonwithstanding, they look equally as good on blu-ray as movies shot with high-definition cameras. Even many of today's movies are still shot on film, not HD. ALL movies, however, are TRANSFERRED from film, or from HD cameras, to HD master tapes (like HDCam) or hard-drives, for mastering, in HD, to blu-ray.
Even DVD has DTS sound. Blu-ray adds "HD" sound to the DTS spec, for much higher audio bit-rate and nearly no audio compression, but, of course, you need an "HD audio" receiver with HDMI connection to hear it.
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