It does just seem like they didn't think it through well enough - a proof of concept box instead of a full retail product.
Maybe it was a response to the Xbox 360's media extender capabilities?
Essentually it's a half power mac mini for half the price, it's a real shame it has so much less then half the usefulness. I'm torn between saying it's overpriced because it does so little, or it's cheap because there's a hd capable computer in there just waiting to be used to it's full extent!