I've watched the Matrix trilogy which was re-released in Blu-Ray 1080p and 5.1 Surround through my HE-500's. With no surround virtualizers it sounded just fine. Obviously not as 5.1/7.1 as my 7.1 Surround which is not an impressive speaker set up (mid-grade consumer speakers) but it was extremely passable and enjoyable to watch the movie that way. I used to watch a lot of movies with headphones about one or two years ago, using headphones like the AD700 or the DT990. I like the HE-500 for movies all the same.
Yeah, its the surround virtualiser that kills the sound. Without it sound is just fine with perfect clarity, just lacks most of the directional cues and sounds coming from left or right side comes from TOO left or right instead of their actual "sound source". Though that latter one can be fixed with Meiers crossfeed device that I own but is not plugged in ATM.