Maybe I have low standards (no comments!
) but I find the second worst TiVo compression to still be fine for me. It has trouble with rendering a flashing police car light at night but that's pretty obscure. However this acceptability for me also could be connected to my lousy cable reception.
I'm personally not convinced that the typical family is ready for family PC/TV integration. I believe that the computer is still a solitary device, I suspect that often the visionaries in these kind of areas are WAY WAY WAY ahead of the mainstream. (See AOLTV for a recent failure in this space.) However I've also been accused in the past of lacking vision, which I guess is the flip side.
That aside my seat-of-the-pants marketing sense is that if you can do it with a 2 gHz machine that would be fine for mainstream acceptance with prices coming down.
But to repeat myself from another thread and possibly overstating the obvious, getting the UI right is IMHO the most important aspect of this whole concept.
All opinions of course and your mileage may vary.
-=Tim=-