BugByte, check out my post on the other thread. Essentially, I propose exactly as you do. I might suggest a GumStix, as it's smaller and really designed for this work. http://www.gumstix.com/ is the site and they have a number of these small computers. some with built in wifi, and complete power specs.
huh, i hadn't seen it before, but they even have an output for a small touchscreen. I think I see my project forming very quickly.