Apple's iTV: what the heck is it?

A friend emailed this to me recently:

At first I was surprised by how open Steve Jobs was being about discussing upcoming products like the iTV, which he NEVER does. Lately however, I think this was done to "freeze out" competition in the Mac market. TiVo doesn't natively support transferring files to an iPod (yet) and the Neuros coming up to speed forced Apple to dangle the carrot in front of us saying "don't buy these other expensive gadgets now, wait for our cooler version."  How many times have you or I said, I'll just wait for the new (iPhone, iPod video, MBP, MP etc.) without even knowing what is on the horizon.

Let's face it, iTV is not a revolutionary device like the iPod, it's evolutionary. From what I can tell its a glorified storage device without the ability to record files, but again I might have missed something. I am still a little puzzled as to why I would want to pay US$10 for a digital download of a movie that gives me "Nearly" DVD quality when I can go buy the physical DVD for US$13 and get REAL DVD quality.

A friend really got me thinking about what, exactly, the iTV is. Currently I have more questions about it than answers.

I don't think that iTV is a "glorified storage device" at all. In fact, I don't think that it has any storage. I think that it's more likely to be a podium for a Mac mini to sit on - which gives it a) storage and b) a DVD player (Blue Ray hopefully!)

I think that Steve thinks that people will want to broadcast their iTunes-purchased movies, visualizers, YouTube videos and general Mac content to their TVs instead of "cabling up" to the TV each time.

Apple may be positioning iTV as more of a Airport Express for video. The problem with this is that I like to use my Mac while I am watching something on TV, which isn't really practical if the Mac I'm using is the host. Maybe the Mac mini (dual core, no doubt) sitting on top of the iTV is the host and the wireless Mac is just the remote control? 

What do you think the iTV is/should be?