That makes some sense.

However I would then argue that Apple should put all the 'TV stuff' (cable input, av input, etc) in the Apple TV and have that plug in to the TV. Added benefit of being way more portable/modular.

EDIT:

Actually I'm not sure that makes sense. It seems like Apple's goal is to get you consuming content through Apple. How would a TV be any better for that purpose than the Apple TV? With the growth of streaming video and the decline of cable it seems dumb to optimize for cable. The user experience would be for you to leave the input on the Apple TV all the time and do everything there -- tv, movies, iOS games/apps.