But has anyone done this here, essentially used a PC in a console set up.
Yea, a few years ago in my bedroom. When i bought my PS3 i also bought a 32" 1080 HDTV, i connected both the PS3 and the PC to it, HDMI is so awesome.
I use the PC for everything-home-entertainment these days, gave my PS3 to my nephew.
Using a wireless keyboard and mouse while sat back into the sofa.
When i move into my own place later this year im contemplating getting 3x 3D 1080p HD TV's side by side in the lounge, the PC will have to cost £2k to run that kind of setup to play the newest games with medium/highest settings with a 30+ FPS rate.
Or i'll just go with a single 47" TV, i can easily afford that kind of setup.
As for the PC blending well into the living room, you got various options; have the PC box on a shelf in clear view near the TV, or have it near the floor, or just have it hidden away behind the side of something... obviously making sure theres enough breathing space for the fans to work properly. Im going with this
so the PC should blend in quite nicely near the TV.
Really there is no need for some kind of "PC-console" hybrid. Anything the console can do the PC can do better and more. Just be creative with where and how to situate the PC, no one wants to see some large gadget box looking out of place.