Still images aren't necessarily the best way to compare lossy video. Lord knows that single DVD frames from scenes that look crisp and clear can look awful. You just have to pause a DVD to see that.
Sure if you watch a blu-ray and then the DVD version after you might not notice, but side by side and you can tell a mile off.
Yes, well people do tend to watch two versions of the same film at the same time.
It's a bit like MP3s. If you were to flick between a CD version and an MP3 version of the same song, the MP3 sounds really bad. But listen to it by itself and most people can't tell the difference.
I agree with those who have said that HD disc formats were launched way too early.