Here's what I think the "boombox" would be like.
The "boombox" is basically an Airport, with AirTunes capabilities. It is different from the AirportExpress in that the "boombox" comes with a remote, build-in speakers, and a display. You can stream music from a mac to the "boombox" just like you do with the Airport Express, but you can also control it directly from the living room because of these added features.
Furthermore, the "boombox" can receive video streams from a mac or the internet and feed into a TV set. You can now listen to music, watch videos, movies, etc. that are stored on a mac without leaving the living room. the Front Row will be the interface that appears on the TV.
Something like this should not be very difficult to be built, and my guess is that it will be something like $300. Yet it can basically turn a mac into a media center in a snap.
This could be really really big, if Apple can build a movie distribution (streming) system just like the iTunes music store.
The iTunes will manage the contents so the "boombox" will be available to PC users as well, and Apple can dominate the movie distribution business, just like they did with the on-line music distribution.
Your basically descirbing an eyeHome by ElGato as well as other media streaming devices coming out, which puts the price point at around $199. A $299 model might be a hard sell to a market that is going to be competing with Blue Ray and HD DVD as well as other streaming solutions. Apple does have an advantage in the iTMS if they can make it work, but they will need to reach "critical mass" for the product ASAP if they want to control the market forces like they do with the iPod and iTMS so the more competative price would be advisable.