Ok. I finally have some time to address your questions.
1. Can MC11 do all this?
YMMV, but I would say no. There are things you can do with MC to "hack together" a true DVR application, but generally MC won't really handle what you are looking for (TiVO replacement). You can certainly use the built in TV functionality to watch and record TV, and the timeshifting even works (kind-of) but there is no integrated Program Guide and the Timeshifting isn't really up to par with other applications out there.
Frankly, this isn't shocking, as the other non-free DVR applications out there cost signifigantly more than MC. I, personally, think JRiver would do a great job at building a DVR app integrated with MC if they tried, but
we have to convince them that it's worth the effort.
What MC does do is handle "stored media" playback and organization extremely well. It is really THE BEST media organizer out there. I, personally, find the Theater View (MC's "10-foot" interface) quite usable.
My current solution is to use a combination of
BeyondTV (for Program Guide, recording, timeshifting, and TV Viewing) and then to use MC for managing and playing all of my stored media (audio files, AVI's, OGMs, etc). On top of that I use WinDVD for DVD playback. MC does include DVD playback functionality but I've found it's interface lacking (however, since I almost always just AutoGK --> XviD my DVD's I rarely have to actually USE the DVD Player App).
Another great option for a DVR application is
SageTV, which is a little more difficult to get going but is overall more powerful than BeyondTV (I own both but use BeyondTV because Sage doesn't fully support my ATI-based card). Generally, BeyondTV is the "slickest" one out there. I have found the brand-new v4 to be extremely stable (which couldn't be said for v3.7+ at all).
2. Can I hook this up to my TV/Stereo but still use the TV without the PC? I want something simple enough that my wife can use.
To answer the first question, yes. If you have a "crappy" TV you might run into problems, but
they won't be unsurmountable. Most mid-sized and better TV's now have at least a handful of AV inputs. I, personally, don't do it this way though...
When you turn on my TV, it is ALWAYS just a monitor for my computer (connected to the computer via my ATI Videocard's SVideo output). My stereo isn't really a stereo, but a
Klipsch ProMedia Ultra 5.1 system hooked directly up to my computer. If you already have a nice sound system you should be able to integrate it with little trouble.
The one piece of equipment you WILL need is a TV Tuner card of some kind. I would
strongly recommend that you go with one that has a hardware MPEG-2 (or even MPEG-4/DivX) encoder. The software-type encoders that come with the cheaper cards (and the ATI AIW video cards) typically just don't cut it. I have, and love, a
Sapphire Theatrix ATI 550Pro-based card.
Hauppage also makes a huge line of TV Tuner cards (which I find to have lower quality video playback than the 550Pro cards, but they are much better supported by many DVR applications).
One really nice feature of both BeyondTV and SageTV (and many others) is their ability to control Set-top Satellite Dish Receivers (such as my old RCA DirecTV box) and Cable-boxes via Serial cables or IR-Blaster devices.
3. Would I be better off with a dedicated DVR app or maybe just going with MythTV?
I like the dedicated app solution better for a few reasons.
1) When you come right down to it, it's just a Windows box. You don't have to learn how to fix a whole new OS if your TV breaks.
2) Gaming. One of the reasons I love my HTPC is that I can play Call of Duty (COD2 is arriving from Amazon on Monday) on my 38" TV on the couch! Plus, Need for Speed, FIFA2006, etc. On top of that, you can go out and download a few console emulators and you have an old-school NES, SNES, Genesis, etc too! I bet you forgot how fun playing Mortal Kombat, Zelda, or Double Dragon could be!
3) Flexibility. If some new "killer" HTPC app comes out, no big deal. You can get it. With the dedicated system you're pretty locked in.
4) DRM. I refuse to fight with my HTPC to be able to re-purpose the TV I record. I'm not talking about sharing it with millions over P2P, but the ability to convert it to watch on another computer at work (or maybe eventually on an iPod) is a required feature. With Microsoft's Media Center Edition you have to fight with it to succeed. I
refuse to cede my First Sale and Fair Use rights to the media conglomerates!
(continued in next post)