Thats strange, my WD TV plays DVD exteremely well infact almost near to Oppo's quality. Check my thread on WD TV vs Oppo for a screen shot of DVD VOB played in WD TV.
Something wrong with your WD TV may, HDMI cable will not be culprit bcos in digitasl you either get 100% signal or you dont, unlike analog.
See if you can hook another WD TV or update firmware or call WD