The two legal venues for downloading movies are the iTunes store and the Xbox 360 marketplace. There are probably more, but I don't know about them personally.
Problems with both:
iTunes movies are downloaded at lower-than-DVD resolution, and there's no way to get a higher rez version. I don't think the software allows you to burn a DVD, either, so the only way to legally view your movie on a TV is with that Apple TV gadget nobody's buying. Otherwise, you're stuck viewing the film at your PC.
Microsoft provides no method for backing up your Xbox 360 movies, so once you're out of disc space, you're in trouble. I think there's also a timer attached to the movie, so you can only watch it within a certain timeframe.
Seems to me the field is wide open for somebody to offer a better service.
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