Well, I'd say the interoperability shouldn't be a problem, I think even my old 7950GT had HDCP (IIRC on DVI even), I bought my 24" three years a go a bit earlier than my PS3, which I connect to it via HDMI, works with Blu-Rays just fine.
Only problem is, Blu-Rays have 24 frames/sec, the monitor 60, so there is some stuttering that is noticeable in slow scenes and slow camera pans. Then again few TVs have a framerate that is a multiple of 24, like 120Hz, a few have special "algorithms" or whatever for Blu-Ray but I have no idea how well they work or how much stuttering is visible on such TVs, may heavily depend on the model.

To watch Bl-Rays I suppose you may want/have to buy a proper playback software like WinDVD, the Blu-Ray editions cost a bit more but I'm not sure whether Win 7 has a proper decoder preinstalled.

Even with the little stuttering(which really isn't always noticeable) I still prefer Blu-Ray over DVD by a whole lot, the quality, if properly done, is quite amazing.