Since no one mentioned it, both Dolby TrueHD and DTS-HD Master Audio have provisions in them to downmix a 7.1/5.1 track to 5.1 or stereo, so you can get a lossless, stereo track from a 7.1 or 5.1 mix on a Blu-ray disc. You don't need a separate audio track as it's built into the codec for that reason.
Second, going from 1920x1080 to 1600x900 is only losing 30% in resolution, and would effectively do nothing to allow for a lossless image to be presented. Going with Tree of Life (which is the best looking Blu-ray disc I saw last year), it has an average video bitrate of 33.7 Mb/sec, which is effectively 35:1 compression from if you had a full, lossless RGB 1080p image. Going down to 1600x900 means you only need a compression ratio of 24:1 to get down to this. Of course, this is for a 2 hour movie with no extras on the disc, and for longer movies, it would need to be greater. Now, there are some other things to think about:
- Since Tree of Life is 1.85:1, and other films range from 1.33:1 up to 2.55:1 or anything in-between, you often have some sort of letter-boxing or window-boxing on the image. This is just black, so it compresses amazingly well, and you save space then. So maybe you only need 20:1 or 15:1 to get this.
Right now, movies are encoded at 4:2:0, so you have full Luma detail, and a quarter of the chroma detail. It sucks that you are missing chroma information, but it's also incredibly hard to see when there is any sort of motion, and anything other than a test pattern designed to show off the missing information. This saves you have the bitrate, and the expense of almost nothing.
Of course, then you get into MPEG-4/AVC/VC-1 compression and the artifacts that those introduce. It is possible to have compression to save space without any loss in quality by bringing over data from the previous frame, as with 24p content (all this math is based on 24p, as that is what most Blu-ray content is) there is going to be a lot of repeated information in both frames. This isn't going to get you there, but it's going to get you closer than before.
Finally you have compression that, yes, will add noise, or a loss of detail, or block artifacts, or a combination of everything listed. Done well, you'll be very, very hard pressed to notice this on a Blu-ray disc. For the most part, a lot of this will even be masked by your display, where its inability to fully reproduce motion resolution at 24p is going to cause you to miss details more than the compression on the disc is. I'd argue that your display is holding back the content encoded on the disc more than the disc itself if. Most LCDs are pretty lousy with motion resolution (perhaps 400-600 lines, certainly not 1080), and plasmas are better but they have their own issues as well. Unless you have something like an OLED that has far better motion, or a prototype CrystalLED set from Sony, most of those compression artifacts are going to be missing since a display can't fully render them anyway.
It would be wonderful to have a playback medium that can do full 8-bit or 10-bit per pixel color, with lossless compression that results in no artifacts, but going to 1600x900 isn't going to make a realistic difference in doing so, and the difference between uncompressed and compressed is very, very hard to notice without really reference quality gear.
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