The movie industry and others will go to great lengths to combat piracy, even if that means hurting early adopters of HDTV technology by crippling functionality. AACS, the DRM-esque technology for HD-DVD players, will not produce a full quality signal from component video connectors, as analog is "unsafe". The resulting resolution is 960x540 - more than a standard TV, but vastly inferior to the actual 1920x1080 resolution that HD will support natively. That's not the end of it either.

In addition to the "image constraint" issue, AACS has a few unresolved points, so the first players that are due to come out this spring won't have all the features promised by HD DVD and Blu-ray. For one thing, you won't be able to copy material from a disc to, say, your PC via the "managed copying" function.
It seems with each successive advancement in technology, another copy-protection scheme is unveiled that hurts the casual consumer more than anything, or at least those who are unaware. Potentially, you will be able to upgrade some hardware as standards become finalized to allow your hardware to function better with AACS, but I wouldn't count on it.