More info on my install:
1) I downloaded and used the 10.5.5 Lite image, so I can only verify success with that install.
2) I restored it to a 250GB external USB drive, so drive size shouldn't be a concern.
3) Audio over HDMI does not work. (No surprise there)
4) Plex was painfully slow. I let Plex Media Server scan my movies folder for about 1/2 a day, during which the machine was basically unusable due to the load. Trying to navigate the library inside Plex was very slow.
5) QuickTime Player crashes. I presume this is due to the audio fix regarding patching the AppleHDA.kext I've read about. Correct? Is there a workaround that preserves current (optical) audio functionality?
6) I'm using a powered USB hub that connects my boot drive, a Drobo (for movie rips) and a PS3 Eye. All appear to work fine.
7) iChat crashes when video chatting for more than ~1 minutes. Signs point to previously mentioned QuickTime issue.
In short, I've given up on this being a media player but am more than happy to have it be an iTunes/DLNA server and bit torrent machine.
Why I think (hope) this setup works well for me:
-It replaces an obnoxiously loud and power hungry Sawtooth G4/1.4Ghz.
-I have a PS3 for MP4/DivX playback via MediaLink. The AppleTV appears capable of serving it my 720p rips. Have not yet tested this under a "full" torrent load.