As luis said, an iMac + the mini dvi to dvi adapter + long dvi cable will do you fine. The mini dvi adapter on the back of the iMac is really only for plugging adapters into to get the right output you want anyways.
Or going back to your original thought of using a mac mini, you could always get one and an external hard drive for storage (there are a few companys out there that make external drives that match the look of the mini), or have another computer act as a file server.
For htpc use, people prefer to go the mac mini route for placement purposes.
Depending on how long you're willing to wait, Apple is coming out with a device called the iTV that will let you wirelessly stream video to a TV, similar to elgato's eyehome.
http://www.engadget.com/2006/09/12/a...g-box-in-2007/
http://www.engadget.com/2006/09/12/h...itv-prototype/