It is going to require much more storage though. I just don't see how they can do it without raising the price of the aTV to around $200.
No it wouldn't. You're thinking it's too much like iDevices.

TV is different in that it's big storage is outside of it's box. It's not a mobile device so it doesn't need much on-board storage. It runs one thing at a time and if that was a app, it would only need enough onboard storage to run that ONE app. If you had 100 game apps on it, the other 99 could be stored on the hard drive within the Mac from which the

TV gets anything it's going to display (movies, music, etc). Just as all of our movies, music, etc don't have to fit into the on-board storage, neither would up to a huge library of apps have to all fit. Just one at a time streamed over as you want to play that app.
Change games (app)? No problem. It would work just like choosing to watch a different movie. It kicks the movie (app) you were watching (playing) out of memory and streams over the new movie (app) you want to watch (play).
The point: this little box could run 100 or 500 apps just like an iPhone or iPad. The difference is that the bulk of it's inactive app storage is on the
outside (on a hard drive somewhere else in the house). It would be like having the 32GB or 64GB of iPad storage on the outside of the iPad. It wouldn't work if the iPad went away from that storage. But the

TV doesn't leave the house. It's always connected to storage much greater than we can get in any other iOS device. There's plenty of room for apps just as there's plenty of room for movies, music, tv shows, podcasts, etc. If there was anything to covet as "bigger" on the inside, we should be thinking bigger RAM and faster processors.
Extending this a little further: since the

TV is married to a much more powerful computer running somewhere else in the house, it seems likely the app could leverage the horses within that computer and just stream over the video to display on the screen. This would be like some of those services where you can virtually run Flash on a computer somewhere and stream Flash to an iOS screen (so you can see Flash apps on a device that doesn't run Flash). It would also be like running Windows or OS X on a computer and streaming the screen to a touch iOS device. Let the computer do a lot of the work of processing the game graphics, polygons, etc and then stream over a 1920 x 1080 video of what the gamer should see on the screen at that moment. For the

TV, it wouldn't be much different than playing a HD movie... except that it would also be sending back game controller action data (like moving a joystick, pushing a button, tipping a iOS gyro, etc).