Why not pick up a cheap Mac Mini?
I have mine set up so it just sits as a set-top box, and I sleep/waken it with the Apple remote, using Front Row to wirelessly access my videos and iTunes Library from my Mac Pro, and of course it'll play DVDs via Front Row too.
Easy Peasy.
The trouble is front row is not compatible with any video file formats outside of the 2 that Apple supports, nor does Front Row have any hooks for other developers to extend it further (so that it can support said japanese videos).