The Mac desktops just can't compete in price with these "white-box" build-it-yourself PCs. I myself am thinking about building a gaming machine. At TigerDirect.com I can get "barebones kit" for $225 that includes a motherboard with: 1.7GHz Athlon, 266MHz Bus, 5 PCI slots, an AGP 4x slot, 3 DIMM slots (one 128MB DDR DIMM included), up to 4 IDE drives, and integrated sound, all enclosed in a case with 6 drive bays. Ugly? Sure, but it's going right under my desk. Add an ATI Radeon 9000 Pro 128MB for $130, another 256MB DDR RAM for $60, a 40GB HD for $80, a DVD-ROM drive for $42, and CD-RW drive for $47. So for $584, from a reputable vendor, I could get about what you're getting (except with 384MB RAM instead of 512MB).
I would say that what you're getting sounds like a great deal, but I would be most wary about the graphics card. If it's not ATI or NVidia, then you can't be sure that a game will support it. I know I've seen 128MB video cards using the "SiS" chip for as low as $50, but I don't really know how compatible the SiS chip is with games.
Also be forewarned: you should only buy a white box PC if you genuinely enjoy tinkering with your machine. I do, which is why I look forward to building my own gaming machine. In fact, I first got into Macs two or three years ago when I helped my girlfriend upgrade her Beige G3 (now sporting a 500MHz G4 upgrade, 784MB RAM, a 40GB HD, a DVD-ROM drive, a Firewire/USB PCI card, and a ATI Rage 16MB video card. Runs Jaguar great, though at 1/2 the speed of my new iBook).
If you're building a gaming machine, then go for it. Though I still maintain that if you're not a hard-core 3D PC gamer and can spend $1300, the 12.1" 800MHz iBook is still the best overall computer money can buy.