I want to encourage all (one) of you to check out Boxee. I’ve been a fan of digital home theater software since XBMC (which is what Boxee’s coded off of), and the Boxee Beta is hands-down the best software solution for home theater I’ve found.
The organization of online media (and the interweaving of online with local storage) is as good as it gets. I know there are rights issues; I’m going to ignore them for now. Strictly as a consumer product, it’s stellar.
A few things I’d recommend though:
1) Run it off a Mac Mini. I’ve found the software to be more stable on Apple, and the updates more frequent. While this state of affairs is obviously fluid, when it comes to user interaction with digital media, I would rather bet on Apple, despite their putzing around with silverlight/flash.
2) Use the Apple Remote. The software’s optimized for it, and it’s just ultra easy.
3) The Boxee iPhone app (at least earlier versions), was fine, but due to the lack of multi-tasking, if someone calls while you’re watching Boxee, good luck pausing the program.
4) If you are set on an iPhone solution for your remote, go with Hippo Remote (http://hipporemote.com/). Far more versatile (keyboard, touchpad, unique setups for different programs)
5) Don’t connect through VGA. The resolution sucks, and running sound through 1/8” is never optimal. Buy this adapter instead (http://bit.ly/bQGuvJ). HDMI + digital USB sound = better.
6) Or, wait for the Boxee box (http://www.boxee.tv/box). It’s oddly shaped, but the remote’s awesome.
My two favorite benefits to dedicating a computer to the TV is that (i) you can run torrents on their own machine, and (ii) you can set up a music server for yourself to access your tunes at work. There are a few solutions for this, but I’m partial to PulpTunes (http://www.pulptunes.com/).
EDIT: I almost forgot the most interactive feature. The bookmarklet (http://www.boxee.tv/bookmarklet/info). See an interesting video online? Want to watch it later on a big screen? Click the bookmarklet and you’re done. It’s in your queue at home and waiting to be watched. magic!