Blu-ray transfers are notorious for overzealous noise (film grain) reduction, and as avsforum points out, Lord of the Rings looked better on a 17Mbps MPEG-2 broadcast than it does the upcoming 23Mbps VC1 Blu-ray.
Don't think it matters? Check out Gandalf's beard in a side-by-side, enlarge each shot at avsforum into its own tab. It's a worst case scenario, sure, but fine strands become a smear of pixels. The left side of his robe loses a good deal of detail, too.
For the most part, however, I don't see much (if any) physical detail loss in most of the shots, even with my eyes scanning inches from my 24-inch, 1080P monitor. So it's possible that we're all taking all this entertainment a bit too seriously. [avsforum via Blu-ray Blog via CrunchGear]