If Engadget has this right, then two things are now the case:

• I won't upgrade to Longhorn, period
• I'll have to turn off Windows Update to ensure that XP doesn't get downgraded this way

Look at what Engadget is reporting:

So what will happen when you try to play premium content on your incompatible monitor? If you’re “lucky”, the content will go through a resolution constrictor. The purpose of this constrictor is to down-sample high-resolution content to below a certain number of pixels. The newly down-sampled content is then blown back up to match the resolution of your monitor. This is much like when you shrink a JPEG and then zoom into it. Much of the clarity is lost. The result is a picture far fuzzier than it need be.

That’s LUCKY?

It sure is — when the alternative is a black screen. If OPM determines that your monitor falls below the security restrictions (i.e. isn’t DVI or HDMI w/HDCP), you could be greeted with a “polite message explaining that [your monitor] doesn’t meet security requirements.”

Who determines when you get the restrictor and when you get the black screen? You guessed it: the content owner does.

“But I use VGA with my monitor,” you say. Too bad. Unless you upgrade your monitor, you too will be hoping your content provider opted for the blurry-but-visible protection mechanism.

I'd really like to hear someone from MS justify that. If they are going that way, "fair use" just bit the dust.