Very well stated. I simply wonder if this product is aimed towards an era that has not begun. Believe me, I am waiting for the day when I can throw away my crappy Comcast set top, and stop paying high monthly fees for tons of crappy shows I don't watch to be piped into my home 24/7, just to get the few I do. I also don't particularly like storing stacks of plastic discs.
I want this new age of media to start asap, and I'm glad to see Apple taking steps towards this end. I just wonder how well a product that is totally geared toward the future can do when the majority of the population is still struggling to catch up to what's currently available.
It is possible; the

TV may be aimed at an era which hasn't yet begun... Apple could possibly be making the same mistake as they seemed to make with the Newton. (I do not have first-hand knowledge of this, but to me, it appears that they made one of the first PDAs, and at the time, there wasn't much of a market for it. Now, though, PDAs are everywhere...)
But, I think Apple may have actually planned for this. They aren't creating a new field, they are making it work; people like Microsoft have already tried with cumbersome "media extenders" that don't "just work." Apple, however, probably aims to do something much bigger than "media extenders."
I think Apple plans not to take over DVD, but to take over Blu-ray and HD-DVD before they have a chance to spread. Why bother with optical media, after all? Disk space is cheap, so why not simply store everything on disks, and back them up (say with Time Machine?).
To do this, I think Apple will do one simple thing: I think Apple will allow 720p w/surround sound content to be downloadable from the iTunes store, and playable on the

TV, all for significantly less than it costs to buy an HD-DVD or Blu-ray disc (isn't that ~$30+?). If Apple does this, people may start asking, "Why should we pay more for these high-definition disks, when we can download it, without even having to leave our computer?"
Apple could further enhance this by allowing movies to be downloaded (and watched while downloading) from the

TV, much like they do with iTunes. Then people will ask, "Why bother going to the store to buy HD media, when we can download it and start watching it within a few minues?"
Apple could potentially be the surprise player in the HD-DVD/Bluray wars. The only weakness they would have is that they do not support the extra features in HD-DVD and Blu-ray. I wonder if Apple has something up their sleeves for this as well?