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I wonder though if they'll preserve the disc break/intermission for the theatrical release.
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Highly unlikely. When I saw the special theatrical screening of the Fellowship Extended last year (it was a promotional contest for the release of the DVD), it did not have an intermission.
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a progressive scan DVD player can look "cleaner" and show more detail (even at the lower resolution) that most commercial theaters
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Mmm, I wouldn't say THAT. The reason I wouldn't is that I've actually seen the FOTR DVD projected on the big screen.
At that FOTR EE theatrical screening last year, they projected the documentaries straight from the DVD onto the big screen, and both my friend and I were amazed at how close the scenes from the film looked to an actual film print. It wasn't quite there, but it looked very good. If I hadn't known it was DVD, I don't think I would have guessed, though I would have thought they needed to sharpen the focus on their projector.
Then they showed the film itself in DLP, which of course blew the DVD away.