HTPC hardware recommendations

I'm currently running an old Power Mac G4 as an HTPC. While it does a fine job for SD video files of TV shows, anime, etc, and a fine job for DVDISO/VIDEO_TS folders, I'm toying with the idea of either upgrading or putting together a whole new system to connect to the TV for theatre purposes.

I had a few questions about this, hardware-wise.

First of all, would a Sonnet Encore Duet dual-proc 1.8GHz G4 upgrade have the oomph to play back 1080i/1080p content? The current proc (single-proc 867MHz G4) can just barely handle 720p. If a CPU upgrade can enable the Mac to do 1080i/p playback then I might go that route.

However, the CPU upgrade in question is $600. I was looking at parts on NewEgg and I can assemble a whole new PC for just a little more than that. What I'm not sure of is which CPU and video device I should be using.

My initial choices were an AMD Athlon64 X2 5000 at 2.6GHz and an Nvidia GeForce 8600GT, as I remember reading that the 8600GT has MPEG4 acceleration that helps HD playback.

A few notable things about this:
-I'm generally not a fan of Intel. Call it geek politics, but I still think of the MS Windows + Intel hegemony and manufacturers always leaving AMD with their then-better chips out in the cold. If current Intel offerings are truly light-years ahead of what AMD has to offer, then that's fine and I'll consider a C2D or something instead. I'm bitter but not bitter enough to shoot myself in the foot

-This won't be used for (much) gaming or video encoding. I have a Power Mac G5 Quad for video gruntwork, and it does a lovely job of tear-assing through any video file I throw at it. I'm not worried about having to do much beyond smooth playback on the HTPC.

-That said, I would really like to be able to play back even 1080p with no dropped frames or stuttering. I don't know if the Athlon64 X2 + 8600GT is sufficient, insufficient, total overkill, whatever for that purpose.

-Also, it is going to involve the use of a DV-->HDMI adapter. I can't imagine any video cards having a problem with this, but I know some ATI cards have problems with DVI-->component due to a sync-on-green issue that I still don't quite fully understand. Again, probably not a problem, but I like to cover all my bases.

-Also also, motherboards. Does it really matter which one I get? What are points to consider when picking one for an HTPC, aside from plenty of IDE and SATA ports for lots of storage?

-Also also also, memory. How much/what kind is needed for HTPC purposes?

Thanks much, guys. I do appreciate it.

Jam it back in, in the dark.

Cool, thanks.

As mobos go, I try to stick to the well-established names. ASUS, ABIT, Gigabyte, DFI. I've had bad experiences with MSI so I tend to shun their products.

Wow, I didn't know I could go as low as a 3800. I think my logic was that since I was unsure about the video card, I wanted to get a beefy processor in case the video card didn't wind up cutting the mustard.

Also good to know that I don't need the extra gig of RAM. I know RAM's cheap, but with something like this I want to have lots of money to pour into lots of storage considering that HD videos are HUEG LIEK XBOX.

Oh, what about onboard sound? Is it crap, is it good, is it okay but worth it to get a dedicated sound card anyway?

EDIT: Also, RAID. Good for something like this, or a waste of time/money? I'd be doing striping for the read/write performance boost. Mirroring isn't that important considering that when it all comes down to it, it's just a bunch of pirated movies.

There's nowhere I can't reach.