The biggest thing I have heard from people is that performance suffers in the name of noise from the box itself. The noise comes from fans and stuff but with modern brushless fans, they can be made very quiet. You can even use coolant systems or heat pipes that are fanless and therefore dead silent.
The problem though is heat and it needs to be dissipated. But a good deal of the heat inside a computer comes from not the processor and memory, they are actually quite small heat sources. The hard drives are where the heat is. Even if they are solid state, they will still cook a turkey so to speak. Plus, unless they are solid state, hard drives spinning at 7200-15000 RPM are very noisy.
But I have a way to have a home theater box in your home theater room running Windows Media Center but you can mount and store the drives in another room where the heat and noise will not be an issue.
The biggest issue with racking a machine remotely is that you gotta pass not only data but video, audio and input across the network connection to the receiver or processor and that takes excessive bandwidth that only hard wired gigabit networks have the ability to handle.
But if I can make the PC quiet and move all hard drives behind the scenes somewhere, I can solve the high bandwidth problem easily. If the HT box is in the rack next to the receiver, you only need your digital coax or optical cable outputs from the video and audio cards. The processing is handled locally by the computer. You still need a network connection but it can be a simple 100BaseT because you are only passing data, not processed information. You might be able to even do it wirelessly because the new N standard is quite fast compared to older G standards.
Basically, I can boot Windows, without PXE or any other kind of software assistance, across a network connection and that allows me to move all hard drives off of the chassis and put them in another room. All you need then is one line of ethernet cable running to a small switch that networks to your HTPC. I can pass high definition video and sound at 1/10th the bandwidth needed to pass already processed information. If you have a home network, it would not be difficult at all to scale the technology to make any PC in the house a media center "portal" so to speak. On top of that, even at current prices for hardware, I think I can do this for less than $6K for a turnkey solution. Just gotta install it. Of course, if you want serious, hotrod components inside, the price would reflect the cost of those components. But you'd get all the benefits of an HTPC including DVR, audio files galore and even video games and such if the box is equipped well enough. Plus, with a remote storage solution, you could go whole hog and get something like an Apple X-Serve for about 7 terabytes of dataspace. You know how much porn that could hold?
I'm just wondering if this solution is worth it to refine this idea and see if I can't market it.