While going through my usual Australian tech forums, I found this shockingly refreshing solution!
LinuxMCE is a free, open source add-on to Ubuntu including a 10' UI, complete whole-house media solution with pvr + distributed media, and the most advanced smarthome solution available. It is stable, easy to use, and requires no knowledge of Linux and only basic computer skills.
Explanation of purpose and History
Video demo (Google Video)
(Comparison with Windows MCE)
Get it here...
Look out Windows XP MCE! There's a new player in town!