Agreed the X1600 may support HDR but it lacks the horsepower to back it up.
I'd rather have a good, powerful card over some features. X1600 can't handle HDR in today's games, so the X850XT owns the X1600.
Both of you are forgeting Oblivion where the X1600Pro does very well and can handle HDR rather well (far less penalty on the ATi 1K series than GF6 & 7), and it's far more clean than HDR in FartCry and such and the penalty is minor. The friend who now has my editing rig with an X1600Pro in it can run Oblivion @ 1024x768 with HDR and 2XAA.
But for most oher apps I'd agree, the X850XT is the better choice in 99% of the games out there, Oblivion is the absolutely only exception out there, and some of that may be memory improvements since supposedly Oblivion has no oclussion culling and renders everything seen or unseen, just like Morrowind did.