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Smoke&Slide I don't get it. When you say you want a Steam Machine to 'connect' to an IPTV box, what do you mean? I thought they were standalone devices that plug in to a TV. Also what do you watch on your IPTV box, is it stuff like Netflix and LoveFilm or am I misunderstanding what an IPTV box is? What does the Arcam RDAC do? As far as I can tell it's for streaming music over a network, is that correct?
Or to approach it another way, what is your goal? An all-in-one music and video streaming box that also plays games, or...?
My first thought is to suggest you look into XBMC and the Raspberry Pi, which is a £30ish general purpose ARM computer that runs Linux, most people turn them into media servers/clients. I can promise you a Pi and a PS4 will be cheaper than a Steam Machine since they're just PCs with a reasonably high standard of hardware; I seriously doubt they'll be below £400.
Secondly, if you already have a PC, you could get an Ouya and use it with Splashtop or Kainy to stream video and audio from your PC to Ouya to play PC games; SteamOS will have a similar streaming feature that has a lot of people excited, I've done this Ouya thing and it works reasonably well. You can also install Netflix and XBMC, probably a whole load of other streaming services too.
SteamOS is a PC-optimised Linux distro, so while I doubt it'll do a whole lot of anything but gaming when it's finally consumer-friendly (rather than it's current state), I also doubt it'll be long before useful media services are ported to it. Even then, though, I wouldn't expect compatibility with all existing solutions.
