Is it just me, or does that sound like it might make a decent gaming machine, if you don't get too greedy about graphics?
If that's the case, the consoles are in trouble!
You could just about eliminate any and all compatibility and piracy issues, you wouldn't require customers to have an existing console, and conceivably you could still profitably sell the game at $50.
It wouldn't be very environmentally friendly (you're forcing players to buy a new console for every game) but it could make economic sense.
The devices are certainly small enough to stack behind your TV; you just need a decent KVM switch designed to work with these devices.
http://foundationlibraries.blogspot.com/2011/06/cfl-podcast-...
He also talks about the original educational purpose behind it and how its expanded due to interest from the 3rd world and others.
At 700MHz, this thing is clocked at nearly 100x the ARM3 I started out my career on. And it has a vector floating point.
It would be awesome building a really stripped down kernel on this with a basic graphics kit.
I hop they get the numbers right, because they are going to get a lot of orders.