It appears the major sticking point concerns the depth of the memory layer on which data is written: HD-DVD favors a datalayer 0.6mm beneath the surface of the disk, the same depth as on the current generation of DVDs.
Unlike Blu-ray, which has a much shallower (and therefore a more delicate) datalayer, an HD DVD has its digital information etched deeper beneath the surface just like a conventional DVD and can therefore be stamped out on much the same sort of equipment as a DVD.