There has been no press release yet from Microsoft on this, but the following bullet-points outline improvements for the Xbox 360 HD DVD add-on that are apparently to go in tomorrow according to threads at the AVS Forum by Amir Majidimehr, VP of Microsoft's Consumer Media Technology Group:
Fix DD being stuck in "Night Mode" which is essentially Dynamic Range Compression leading to the sound sounding very flat
Option to output ALL HD DVD audio as DTS 1.5Mbps (list includes DD+, TrueHD, DTS, and any other audio option offered on HD DVD discs I may have missed)
Option to output ALL HD DVD audio as DD 640Kbps, (which it currently does, but will be fixed from the Night Mode bug), list includes DD+, TrueHD, DTS, and any other audio option offered on HD DVD discs that I may have missed.
Option to output ALL HD DVD audio as WMAPro 1.5Mbps, (list includes DD+, TrueHD, DTS, and any other audio option offered on HD DVD discs I may have missed) for those receivers that support WMA.
Option to enable/disable Night Mode (with the default set to off)
Fix a number of disc incompatibilities (including DVD Essentials) as well as a number of Lip Sync issues.
Any forthcoming press release by Microsoft will be posted here when available.