I have a very similar requirement to this.
I run http://www.ambisonia.com
, a site that distributes surround sound files in a next-generation format called ambisonics.
I am looking for a harddisk based audio player that is capable of decoding Ambisonic files to multi-channel AV receivers.
The point being that an Ambisonic file can be 'decoded' to any speaker layout (stereo, 5.1 7.1, or even height based systems)... and that the 'decoding' needs to be done in software.... but most users dont want to have to bother with setting up and using their computers. So a Harddisk with a CPU that can do some DSP is perfect.
There are 2 ways that audio streams can get *out* of the system ... analog or digital. digital is clearly cheaper, but analog may be technically easier given that the aim is to get 8 channels out (to arrange speakers in a cube).
It would also be extremely powerful if the harddisk also had Ethernet connectivity with the capability to subscribe to podcasts (this could be managed via a web interface... served by a very simple and small Http server).
Anyway, I'm very interested in this project. Please keep the discussion going.