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iRob, my setup is kind of a long story, because it's been a long process tweaking it. It derives from two principles: Keep It Simple Stupid, and the need to control things remotely.
When I first put a mini (going for the cheapest possible solution here, so I use a pre-owned G4) under the TV, FrontRow & MediaCentral et al. either did not exist or weren't really usable. There was Windows Media Center and MythTV, but I questioned the premise of those applications' UI (and now FrontRow's UI). People consume different media in different ways, so why have a single UI to do it? Most importantly, I decided that 1) you should not need a screen to control music, since music is not a visual medium; and 2) people listen to music more often than any other media, and do so in the background while engaging in other activities, like reading or cooking or whatever, so the 'idle state' of a media center should be an active (if paused) music player. Contrast that with FrontRow et al., where the 'idle state' is a top-level menu, and you need to burrow down to play music. In my setup, I can walk in the door and press one button and music (from whatever playlist is up) will play on my stereo... just like with a CD player, you can walk in the room, press one button, and the CD that's in there will immediately play. No fussy menus.
So I did away menus altogether: I attached semi-complex applescripts to my Keyspan DMR buttons, like:
tell itunes pause
tell eyetv activate
delay 3
tell eyetv fullscreen
Or, when a DVD is finished playing:
tell DVD player quit
tell finder eject DVD
tell itunes activate
I could get to any application I wanted (but kept it to a few apps, for simplicity's sake) from the remote control, with no menus. Four extra buttons on the remote were set to cycle through five playlists each, organized thematically, so I could get to any of 20 music playlists with a few button presses.
For more fine-grained control, I set up a small program on my desktop computer that could control the music remotely, slowly developing applescripts that would choose playlists, artists and albums, toggle shuffle, and even replicate a jukebox function. (A semi-finished version, called 'nTunes,' can be found on scriptbuilders.net if you're interested.)
Finally, I started to watch movies and TV shows through iTunes and wanted access to them (as well as the more fine-grained access to music) from the remote control. So I bit the bullet and set up a menu system from the remote control, basically just adapting the scripts from the nTunes remote application. The menu script is pretty complicated and took a long time to perfect, but what it does is pretty simple:
choose from list {playlist, artist, album, movies, archived TV shows, live TV}
if result is "playlist" then choose from list {all playlists from iTunes} and play result
if result is artist then ...
...
if result is "movies" then choose from list {itunes tracks whose genre is movies}
...
if result is "live TV" then tell application eyetv to activate and go to fullscreen
I set my display to sleep after a minute, for saving power when listening to music (set the remote control buttons to short applescripts rather than keystrokes to avoid triggering the screen), and conveniently, the display knows not to go to sleep when there is fullscreen video playing.
Only two problems with my setup: it uses the ugly Applescript dialogs for menus (they can be hard to read when I jack my resolution up to 720p) and I'm stuck with the Keyspan DMR for its Applescript and Keystroke triggering. If I can learn to adapt Remote Buddy to mimic my setup, 1) I will have a better-looking menu system, that still stays out of the way when I want it to; and 2) I can ditch the crappy Keyspan DMR and use a better remote like the Keyspan Frontrow RF or the Wiimote.