We can in theory decode all formats of Bluray video fine.
However only H264 is licensed (but this is the most common format).
Audio is another issue. If you have a receiver or TV that can handle passthrough audio (DTS and AC3) then you are fine.
The GPU can decode these audio formats, but again is not licensed.
The ARM is not really powerful enough to decode multichannel audio when shovelling data at Bluray rates.
So a "codec licence pack" for VC1, MPEG2, DTS and AC3 would be the best option for Bluray, but that is something that has not been agreed on yet.
However all this assumes you have the Bluray data accessible to the ARM. I would expect commercial Bluray disks to have protection on, and I don't know if there are ways around that (and this is probably not the place to ask).