great to hear you worked on it!!
my main source of skepticism is a suspicion/fear that there is some inherent noise in the data, and that winning the contest may in fact require being better than the noise would allow without pure luck. in other words, a person's rating for any given movie may vary a little bit depending on their mood at the time, or based on some truly unpredictable factors. for example, imagine i ask you to predict the votes of 100 people and i happen to know that 95 of them always vote one way, but the other 5 flip a coin to decide which way to vote. now you can't hope to get a perfect score because of the element of true randomness (coin flip). At some point, trying to get better than a certain score on the netflix challenge data is going to look like that -- though whether that happens well before the million dollar prize accuracy i dont know, but that's my fear.