yes never hook up a pc with rca's the picture quality sucks big time.
Micro ATX would be just fine. Its not so much the board that you are worried about, you could have a full size atx board if you wanted. All that matters is how big a power supply you need, how much money you are willing to spend, and how much time you are willing to invest.

It always comes down to money and time.
Think too would you rather have something like a pioneer avic-z2 that has rca out for a rear screen so that the rear screen can watch a dvd while the actual screen in the z2 does navigation or shows you what you are listening to.