Windows video formats?

I was once-upon-a-time a video manager, in the analog days, things have changed... (but we supplied equip for the off-line of Pee Wee's Playhouse, and my maintenance calls got me in to see the cool miniature sets...)

Anyway this project is spec-ed for web delivery on PC running Windows 2000+ and IE6+ and no 3rd party players - the source is dvds and the video is to be segmented and navigable (not porn, actually us gov military training vids... perhaps more offensive, yeah )

I would be PM and know a good video editor/windows programmer-

I think that .mp* files will play in IE without any additional player, particularly .mp4 (tried one) - but do they stream or need to be downloaded first?

Specs also ask for "HD" quality video (on "Broadband" cable AND DSL (!) connections)

Is it better to compress the video and keep it in mp4 format for lo-bandwidth (DSL)? Or is there a better format for lo-bandwidth?

What is the maximum resolution/quality possible (realistically) for US cable broadband?

Is there a format that will stream to IE6+ without a player? (no realplayer etc)