I sat with the Mrs. last night and watched all of Shrek the Third on HD-DVD.  Beautiful picture, nice bright colors and excellent detail on the animation, all of which shows up very well on HD-DVD.  Prince Charming's hair flows in various directions, shadows and lighting throughout show great attention to detail by the animators/rendering team, etc.  The fur and hairs on Puss-in-boots and Donkey shine through, as do the freckles and spots on Shrek's face and on Prince Arthur, uh, Artie.

Story wise this was, as most critics seemed to point out, probably the weakest of the 3 movies, but not bad.  If the first two movies hadn't set the bar so high, this one would have been better received, but a lot of the sight gags and inside jokes have been done in the first two movies, so you aren't as shocked and don't react as well this time.  A few of the jokes do come through very well (especially one involving Gingy, the Gingerbread man).  Somewhat darker at longer periods of time (story wise) than in the first two movies though and that also hurts the acceptance of the movie in many ways.

I'm curious if the web enabled updates for the HD-DVD will add content over time for this title, as my wife was looking for a segment of the Puss-in-boots dance similar to the Donkey dance segment that is available in the extras/web content.  That is an area where HD-DVD should be able to offer a nice return for people that buy the discs as it happens fairly seamlessly and without requiring manual intervention by the disc user (as would be required for DVD users).

Worth the purchase price to me, but I suspect this one is more likely a rental for many viewers.  I'd love to see it packaged up as the Shrek Trilogy so that I could get the first two movies in HD (I have both on DVD, first movie on two disc DVD I think).  If that is done, I hope they don't cheap out on the extras and include as much as they can in the set (something that not all of the early conversions over from DVD to HD-DVD can claim as many times the extras on the HD-DVD versions have been non-existent or not as bountiful as they have been on the DVD side in most current cases).