We’ve been using an MVIX box for the past couple of years to watch downloaded movies and TV shows. The biggest problem with it is how stuff gets transfered to the box. It has a wireless connection, but it’s slow and requires a proprietary app to xfer software to it via wireless. Instead, we connected an external HD and just copy stuff onto the drive, then reconnect it downstairs. Simple enough, but a still a bit of a pain.
Over the past couple of years, the XMBC project has come a long way. One of these days I think I’m going to build a new XMBC box for the TV and see how it works:
http://lifehacker.com/5391308/build-a-silent-standalone-xbmc-media-center-on-the-cheap
If you build one, let me know how it goes.