Having seen andym's Myth Box in action, I have to say it's quite impressive and well worth the effort.

One thing would worry me would be ripping all those DVD's without any form of backup. Have you thought about using some older PC bits you may have and use FreeNAS with several HD's in RAID 5 for max backup and storage space. 4 x 500Gb HD's would give you 1.5Tb of backed up storage on a very low spec machine capable of serving multiple clients.

Cheers

Cris.