I think you are wrong and here is why: As a retailer I've found the VAST majority of PCs? Spend most of their lives in idle.
That sounds accurate, but you're talking about searching hard drives, which are pretty slow. A database of pictures would speed it up and in fact be necessary, not just for speed but for a referent. Anything the program couldn't recognize, like your relatives' and friends' names, would have to be entered manually. Maybe PCs are up to snuff, but the user first setting up the system would have a lot of work and if he had a lot of pictures it would be pretty time-intensive because of the hard drive bottleneck. And look at how much antivirus slows a system down.
As far as who could pull it off? as much as I hate them as a company Apple would be the only ones i could see pulling this off
I agree, but for different reasons. The Linux systems would handle it easily; my Linux box is pretty old but it runs circles around my Windows 7 box. But I'm pretty sure it would need a large, coordinated team of people with differing skills so I'm not sure FOSS could pull it off. Not Windows for sure, their software makes me think they've gotten too dysfunctional to pull it off. Your guess as to what it would cost seems pretty accurate.
I think we'll see it sooner or later, but I'd bet on later.