So how does high definition work?

Someone recently posted on rec.arts.drwho.moderated asking if Doctor Who was going to be released on Blu Ray. One of the replies was that there really isn't much point in creating a high-definition copy of programme that was recorded in ordinary definiton.

This got me thinking: Sky are hyping up their new Sky Movies HD channel, and are particularly focusing on the opportunity to see classic movies in HD. Does the same thing apply? Isn't there a limit to how high-definition a film that's been copied from actual celluloid can ever be?

(Or is the idea that once your giant plasma screen lets you see every crackle in the film, it'll be just like being at the cinema?)