This might, possibly, make a decent Home Theater PC/media center type thing. It's got a relatively small form factor (although, of course, there *are* smaller PCs). It's got HDMI out (I didn't really check what kind of video chip this has installed, but if it's got HDMI out, one would hope that it has a video chip that can handle decoding 1080p video). The little screen means, that, potentially, a media center software vendor can have a User Interface which runs on the small screen, so that your TV just continues to show full-screen video while you do things like checking a program guide, or otherwise are doing 'control' tasks.
Still, I think you'd be better off with a very small HTPC with no built-in keyboard, and use a wireless (IR or BlueTooth, perhaps) keyboard externally. Just keep the wireless keyboard in a box or bin beside, behind, or underneath the couch/chair - grab it out to interact, and while your watching a movie or show, stow the keyboard back in the bin/box.