I can see a standardized mini-PC designed to be a home theater component instead of a desktop being pretty neat, especially if they go balls out on the software side with features for syncing and streaming between your desktop and steambox. The rumor that it's packing an i7 seems odd, though, the i7 is professional grade hardware, not consumer, unless Valve's "3" announcement actually is l4d3, and they're integrating hyperthreading into Source for it, for the AI.
Otherwise there's no value for an i7 in a gaming machine, and it'd massively inflate the thing's price. That hardware would cost Valve over $500, and that's before R&D, miniaturization (you probably don't want something tower sized under your tv), manufacturing, shipping, marketing, etc. It'd make PS3's $600 launch a drop in the bucket. Remember that that Crysis Warhead PC, which was fairly average specced, designed to play on "Gamer" settings, was still $700, and hardware's gotten significantly more expensive since then due to the natural disasters in Japan and Thailand.
Maybe Valve has somehow got a deal going with Intel and Nvidia to sell these things at MASSIVE losses for some reason. Valve's got enough money to finance that, probably, but I can't see the hardware companies liking that idea, especially not using their top of the line stuff.
Also I wanted to post this awesome PC build I saw last year, of a media PC about the size of two Wiis, but they managed to stick a high end, full sized video card in it (the card took up one entire wall of the case, with its exhaust outwardly facing), but I can't find the link anymore. Shame, because that was fucking awesome and it'd be a good archetype for a "pc console", imo.
edit: Found something similar:
http://www.overclock.net/t/988489/sff-i ... ram-no-56k
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