Originally Posted by name='mayhem'
Yes, that would be one of my suggestions at this point in time. Drop a G6950 in there and you should be set.
Do keep in mind, though, that IGPs don't usually allow great deals of video post-processing at HD resolutions. Colour enhancement, sharpening and such things are usually reserved for dedicated GPUs.
I've yet to see a full review on the HTPC capabilities of the new Clarkdale/Arrandale IGPs (including HQV tests), but usually a GT220-class GPU is needed for full points on the HQV tests (the 210, as well as some lower-end Radeons, lack the power to post-process to high HQV grades), so something based on LGA775 (or even AMD) might also suit your needs.
Also, how much of a sound buff is your friend? Audio over BT raises a few question marks for me, even if it is Stereo. Since he's a builder, it will be easy for him to run a couple of extra wires and install proper "sound outputs". Heck, he'll probably only need one, if an HDMI amp is available...