I totally agree with you on this being a matter of prospective... I was on the verge of dumping PS3 for media playback from my file server since dealing with transcoding + the PS3 is IMHO a huge pain in the ass.
With the root key cracked and homebrew soon exploding I'm scheming a quality XBMC port to GameOS... sooner than never ;-)
Which part of transcoding is being a pain in the ass? I find fuppes ( http://fuppes.ulrich-voelkel.de/ ) to be working perfectly. If you're trying to transcode high def mkv/ts/etc, I agree.
Transcoding is a pain in the ass because it requires another computer with a decent CPU to decode in realtime (which means you can't run it off a NAS or some other server-based disk backup, unless you want to shell out the bucks for a really overpowered backup solution).
If I'm going to go through all that trouble and cost, it makes more sense to buy a low-cost ION GPU HTPC ($300) that can just run the video (even HD) without transcoding.
got one of those ion pcs, i recommend it, and your sentiments about how this all fits together. i think a machine really can only do one thing really well (especially something high performance) at a time, and often MPC software tries to do too much at once.
All a matter of perspective ;)