Can someone explain why the earlier BD players cost so much more money and had less hardware than HDDVD? ....
Because Toshiba took the approach that making players as cheap as possible to the consumer would get them in more homes, and the studios would follow. They lost considerable money on each player, planning to recoup their losses when/if HD DVD won. Toshiba was the only one making HD DVD players, since no one else could make money building/selling them. This did not endear them to the CE industry. Onkyo started to sell a rebadged Toshiba, but dropped it because they priced it to make money and were price undercut by Toshiba. Venturer was to ship players- but how many, if any, actually made it into consumers' hands?
The BDA took the approach that they wanted manufacturers to make money selling players. This brought in more manufacturers. And the higher price allowed for more margin for retailers. Since Blu-ray required more development, yielding greater capacity and faster bit rates, plus more future expansion potential, they took longer to reach market and to fully develop. I can understand keeping profile 2 optional, most people don't have anything to plug into that ethernet connection anyway. 1.1 may have been delayed to allow further java development and to save a few bucks in production of initial (1.0) players. Sony, it should be noted, lost money on each PS3 sold early on, and might still be. But the other manufacturers seem to be making money. And early adopters are not as price conscious as J6P. J6P stayed out of this, for the most part, even with low Toshiba prices.
Profile 1.0 players should be able to play all future movies, despite some claims to the contrary. And yes, they'll play many of the extras- just not the PiP type or interactive things.