Like most of my projects, there is constant re-evaluation along the way.
Plan "a" was to build a home theater computer. Not knowing what to expect, I held off on ordering parts until I had tested it. After verifying compatibility using my desktop machine, I left it hooked up and started experimenting. Initially, the intent was to use a pre-packaged distro with MythTV or XBMC. However, I found that things just worked better with VL. The video is smoother and the audio is how I want it. Other offerings showed stutter and no DTS or Dolby Digital output. After some tweaking of the desktop, using bigger icons/text/cursor, increasing zoom in Opera and so forth, it works well with a standard interface.
Looks like plan "b" is to build a new desktop instead.