Okay, not to imply anything derogatory, but why would your parents buy a DVD player to play an HD-DVD? 
First, I really can't see how having "HD" in the name can be a downfall. I know a lot of people buy any HD DVD (generic) and think it will play on their normal DVD player. This is a problem with the average person's education about HD technology in general, and not specific to HD-DVD or Blu-Ray.
Second, while some may buy computer systems with the thought, "hey, this will play my HD DVDs", this is a small minority of people. My parents would never go purchase a computer for the sake of specifically playing an HD DVD, nor would the thought even cross their mind. They would look for an actual DVD player to do that. Regardless, this again is not specific to HD DVD, is it? Don't the same problems exists for Blu-Ray when playing on PCs? That's not a rhetorical question. 
I'm confused how the name of a product would make some feel really "not so smart". That seems pretty silly to me. It makes perfect sense to call it what it is, an HD DVD. Who could argue with that?
I am in complete agreement with you that the video rental companies hold a lot of weight in this battle. And you are right, only time will tell...
Please don't change or correct your post, because it will remove the very point I am trying to make earlier and now. Just as you have forgotten to put the "HD" in front of the DVD, many people, ASSUME that an HD-DVD player will play in a regular DVD player. That is why they end up feeling "not so smart". Because they end up buying an HD-DVD, putting it in their regular DVD player/drive, and it doesn't work. Then they go to the store where they bought the HD-DVD and fight with Customer Service about the broken HD-DVD that they bought and returned for the 3rd time, until someone who actually knows the difference explains it to them, that an HD-DVD needs its very own HD-DVD player.
In regards to purchasing a computer to play an HD-DVD:
Perhaps your parents wouldn't buy a computer just to play an HD-DVD, but many consumers will purchase a computer based on the fact that it has that ability. And, in my experience, the consumer buys the brand new Desktop or Laptop, and cannot play his HD-DVD, which the unit is capable of , and usually comes with a free HD-DVD movie. Then the customer comes in angry cause he just spent over 1000 and can't play his HD-DVD. Then, he brings it in for a replacement, and then after the third time replacing it, someone realizes what is happening,and explains it to the customer, that eventhough they have the correct Hardware, having an HD-DVD Drive in the computer, you also have to use the correct Software, the application that will play the HD-DVD, because the COMMONLY used software players like Windows Media Player and Power DVD and WinDVD do not support it (well they may now, not sure).
In regards to the Blu-ray not working:
It is much easier to realize and explain, that a Blu-ray will not work in a DVD player, because it is called a Blu-ray. You can even explain to a consumer that a Blu-ray is called a Blu-ray because it uses a Blue laser. Try explaining the same thing to a consumer about HD-DVD which also uses a Blue laser, and they will still be confused. Why not be confuse? Its a DVD right? So what if it is an HD-DVD, my DVD player can play 720p and even upconvert to 1080i and thats High Def! RIGHT???
And the reason I point out that "HD" may be the downfall of HD-DVDs, is because of the negative conotation it may receive from all those people who felt "not so smart" during their HD-DVD fiascos.
The reason people feel "not so smart" is because,
as human beings, we all tend to make assumptions.
(And I hope no one finds this derogatory, but I am quoting this from a movie)
"When we ASSUME, that makes an ... "
Well, I won't finish the quote, but instead, I will ASSUME that u can figure it out!
