HVDC can be as efficient as 97%, compared with the US average of 93%. That 4% "inefficiency tax" would likely pay for long-haul HVDC connectors (as outlined in one of Obama's 2008 energy proposals) within years.
[1] http://en.wikipedia.org/wiki/High-voltage_direct_current#Adv...
http://en.wikipedia.org/wiki/HVDC_Inter-Island
So it is a proven technology to have this as a long distance link (been in operation since 1965) and it is capable of bi-directional power transfer as well.
Mercury-arc rectifiers (the technology replaced with IGBTs and GTOs) were very large and expensive, and also less efficient (even more so before the 1930s or so) so HVDC only made sense for submarine cables (which have huge capacitive losses). With IGBTs and GTO thyristors it start to become feasible to e.g. do an HVDC line across a continent.
As an example the HVDC inter-island was built using mercury-arc valves (it included a submarine leg), but they have since benn replaced with solid-state devices.
HVDC is also a good to tie two separate grids together; since they will be on different time-bases you can't just directly AC couple them.
[1] http://en.wikipedia.org/wiki/High-voltage_direct_current#Dis... (note: some of these are due to AC parts having economies of scale and decades of efficiencies and process that HVDC may not be able to tap into without widescale implementation)