Interesting article over at Audioholics covering the subject of HDMI and what's wrong with it.  They bring up the legacy of DVI which has a confusing number of options and doesn't handle distance runs well.

"Most computer displays are mounted at most a few feet away from the CPU, so it didn't seem imperative that DVI work well over distance. This lack of concern for function at a distance, coupled with common use of twisted-pair cable (e.g., CAT 5) in computer interconnection, led to a decision that DVI would be run in twisted-pair cable."

The reason this is a problem is that DVI and thus HDMI is not error correcting and runs really fast.  It also runs in parallel which doesn't work out so well over long distances.  This is a real issue when trying to create a home theater.  The better solution would be something serial like HD-SDI.  The article explains some of the electrical properties of coax versus twisted pair and why this causes problems.  HDMI is based on twisted pair.  There are a lot of electrical issues with this configuration.  Moving to HDMI 1.3 with much higher datarates just exacerbates the problems.