Apple TV a new paradigm

Question

My Apple TV does what it says it does and is useful. However I think it is a miss. I also have my Powerbook hooked up directly to a projector and using a wireless keyboard and mouse. I looked over the back shelf in the theater where the projector sits. I had a DVR, a Direct TV HD receiver, a 4 way HDMI switch, a Playstation 2 and an Apple TV, a mixboard and a sound line switch. The DVR is redundant with the laptop drive. I will limit my HDTV watching to watching a window driven by my Escape "myTVPVR" and I know it can only use S video as HD content is blocked outside of the satellite receiver. The HDMI switch seems to be incompatable and looks scrambled when trying to pass a signal. All these components and cables and switches plus a sound system requiring a preamp, scaler, and more switches are only there because the general purpose computer that could be doing all of the sound conditioning, scaling, conversion, dvd playing, recording, burning, sound and video switching, scheduling, is being factored out of the architecture of what should really be a home network server using the home theater as its foundation. With this set up and Leopard to manage multiple spaces on multiple screens using a bluetooth mouse and keyboard as the ultimate "remote" and the ability to go to a webpage and zoom the projector screen onto a small web video window to fill the screen. If you make a spreadsheet of the costs involved for dedicated components versus a full computer centric architecture, you immediately see that it is cheaper to do the computer centric architecture which doubles as the home server to which you also attach a large hard drive, printer, scanner. Cost are further reduced if you implement "network-over-power line". That solves the problem of distributing bandwidth throughout the home without signal drop or interference and better security. A brilliant move for Apple would be to make a "Wii" remote pointer device and use it to control the screen cursor. You could call this the "couch mouse", has a nice ring to it. This would allow control of the full OS X GUI or an icon based program like "Front Row". The cost of good sound would be greatly lowered if, say Bose, made a line of speakers with a built in power amp tailored exactly to the drivers, which get their channel sent to them via the power line network signal. This is an instant multi-room, multi-channel sound system which currently requires expensive dedicated components. Apple need to educate the public that this is what they need and that home networking is now simple enough for non-IT types. The campaign would have the slogan: "It's time to bring the network home".

Answer 1

This is a rework and clarification of my original post that opened this topic.
The Apple TV needs to be transformed from a separate appliance to become a powerful general pupose home server. The "digital hub" done right and for real.
It would take the form of an enhanced Mac Mini with all the ports, WiFi N, Bluetooth, Express card slot and GPU found on a MacBook pro, adding HDMI 1.3 output and input as well as adding a dedicated converter with component and S video in. There would be a matching, separate optical drive so you could roll with the punches on the format wars.
As the home server, home theater functionality is only one node.
Nothing in the above requires any dramatic change to existing hardware and software, however three innovations would "knock the ball out of the park".
1. Control a screen cursor with a "Wii"-like controler. Call it the "Air Mouse" or "Couch Mouse. It would have a scroll ball and 4 buttons like the Mighty Mouse. Make it possible to have several of these devices independently move different unique cursors with their own icon. I'll leave the gaming possibilities to your imagination. Pair this with the existing Bluetooth keyboard but enhance it with LED backlighting that times out after the last touch.
2. Implement the home network as "signal-over-power-line". This could provide higher bandwidth throughout the house without interference, signal loss, with less range away from the house as a security point. This new network-over-the-power-lines would obviously be built-in to the "Super Mac Mini" server described above. Any device is on the network simply by plugging it in for power. A "paper station" for a scanner and printer could be placed anywhere. A power-line-signal to WiFi converter brick could be placed in any room to tie in MacBooks and iPhones.
3. Build or partner with Bose to build home theater speakers with built in power amps tailored to optimize the driver/enclosure. When it's plugged in it takes its signal from the power line network per #2 above. A power-brick sized converter could change the network signal to an analog feed for any speaker that doesn't have this feature built-in. Typical 5.1 or 7.1 signal wire clutter and welding cable speaker wire would be a thing of the past.
It would be ideal if projectors and large monitors were compliant with the 1920 x 1200 resolution common to computers or at least give a choice of resolution within OS X at the more common "TV" resolution of 1280 x 768 or 1920 x 1080. Right now OS X will not scale exactly to a "TV" display.
Backup would be through a central drive on the power line network and "Time Machine" should be fixed to work with central network storage and enable backup to multiple clients.
With this architecture any ad hoc node in the network can stream or store audio, video and text and control home security and automation if authorized.
It should be pointed out also that with this architecture, the "TV" large screen, and Mac Mini Server can be placed on a rolling A/V cart and moved anywhere in the house and set up merely by plugging in one power cord. Any tie-in to a cable or satellite box is done with an adapter feeding it to the power line network.
The trick here is to make home networking so simple, intuitive, standardized, accessible that the consumer experiences the ease of an iPhone.
This would have to be introduced with advertising similar to the 1984 Mac TV spot and infomercials that demonstrate how easy this all is. It would show a huge garage sale for all the discrete devices and cables you could now remove. It would show a breakdown of the system cost for the server components versus the discrete component costs and emphasize that this system provides the home theater, home computer, and expands easily to include home security and automation.
Obviously this network expands by adding iMacs, iPhones, Macbooks as ad hoc network nodes. Perhaps some elements of OS X Server would appear in plain vanilla OS X automating through icon based diagrams with each icon representing a node and that icon right clickable to adjust settings.
The current pile of remotes for each component are banished forever. The theoretical universal remote control becomes a reality.
The catch phrase of the campaign could be; "It's time to bring the network home".