Nope. You got it all figured out. You can map the Powermate to Frontrow and control the whole thing from that knob.
The only issue you will have is with Nav. Routebuddy looks like it finally provides turn by turn instructions, so you can have native Mac nav but switching to it will require you to exit Frontrow and stop the music. You'll have to launch it somehow, then control it. It will be clunky, BUT you will have Nav.
Check out something called Proxis, which may help with the Powermate. It is a sort of scripting language that you might be able to use to solve that Nav issue. Dunno, I haven't look at it close enough.
What you'd really like to be able to do is have Frontrow play but fade to the background when the nav is running and be able to get back to Frontrow whenever you want.