I have NBN 25Mbit/s, can stream Australian netflix in HD perfectly even during peak times.
The problem arises however when switching to US netflix, (where all the good movies are located)
I cant get HD during peak times. As soon as midnight passes, i can get 720, then around 1am I can finally get 1080.
So good luck to those on a slower connection trying to watch US netflix in HD when I can't even get it on a fibre connection.
HD movie quality is pretty good though. On a 50 inch and below tv set most people probably notice any differences to the blu ray version.
On a 140 inch projector screen you will notice the difference to the blu ray version: The picture seems darker, and colours are not as vibrant. The 5.1 audio quality is kind of disappointing too.
I will still rent blu rays, and only watch catalog movies on netflix (most movies on netflix are old catalog titles anyway)