Sony did do a camcorder that used MD-type media - it wasn't the traditional MD format, though, but a 2/3GB-ish capacity disc.
It would be interesting to see Hi-MD being used for MPEG-2 recording, because it would be an improvement over the DVD-recording camcorders, although it would be a tough sell against the Mini-DV or Micro-MV camcorders - since you're talking a smaller capacity and larger physical size. Personally I don't think that's a starter, especially as write speeds may be too slow.
What I would like to see is MPEG-4 encoding and video playback. This could potentially give a long enough playback time. It would not have a problem with write speeds, and would give maybe 2 hours on a single disc.
Alternatively, just taking an AV-input and encoding that, and you could then record from TV, etc, or record from a camcorder, and have a portable media player unit, with easy transfer onto a hard drive, etc.
