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Sorry to hear your sentiments on that, but the Mac Mini is very much great for a HTPC.
Combined with it's size, it's IR sensor and remote, bluetooth keyboard and mouse, along with software such as Front Row and Plex. The Mac Mini is one of the best HTPC solutions out there.
This is where you complain that it doesn't have audio outputs (Red/White) or it lacks HDMI, but it does have Mini Displayport, which can be converted to DVI. It also has optical audio out, which some would say is the best.
Hence the reason why I would like to see a Mac Mini and Apple TV merged. Give the Mac Mini the additional features it needs to be a full on HTPC.
They work great now as HTPC, but with modifications to it's IO, it could be the best HTPC out there.