I'm not willing to consider multiple machines at this point. I simply don't have room for it.
Since I'm not concerned with ultimate sound quality while watching DVDs (which I don't do) and since I'm not concerned with audio in 5.1, I'm feeling that it won't be nearly as intense as the guys over on DIY are experiencing.
I'm also looking at running a micro-atx board with a Pentium D 3.4 GHz and 2 gigs of ram to do this.
Sure, powering it will be difficult, but there are ways around that now.
regarding linux - there were some guys int hat DIY thread that were talking about it, not sure if anyone followed through on it though.