The problem with that is that the Mac Mini's hard drive is too small to store much of any HDTV content. I'm also not sold on its video capabilities (Radeon 9200? Come on!) or its sound capabilities (not even Apple lists any details about its sound card.) If you have a network server hosting DVD rips, you could just stream content to the Mac mini and avoid the entire issue of the thing's HD.
I see the Mac mini as a cheap computer. It's not an HDTV yet, though Apple could clearly make an HTPC Mac mini if they wanted to move into that market.
I see it as the new 'cube'.
It'd be a great little computer for grandma and grandpa. I wouldn't buy one for a kid in college. As long as Apple markets it honestly, it should do okay. I doubt it will be the cash cow the iPod is.
As Hodar said, the Mac Mini maybe the uber DVD-home entertaiment hub - not a number-cruncher / gaming machine.