and then install Linux on it. What is the advantage of spending $500USD on a PS2X and the Linux hardware/software upgrade besides being able to play Playstation games and DVDs on it?
For under $500 I was able to get a 1Ghz AMD Thunderbird CPU, ATX motherboard, ATX case, 512M of SDRAM, 10G hard drive, TNT2 AGP video adapter, Sound Blaster 128 PCI card, DVD drive, and Realtek PCI 10/100 Ethernet adapter. I have both Bleem and VGS which can play the Playstation games in emulation (I bought them last year, long before I lost my job and long before Sony had those emulators taken off the market). Bleem can even do some PSX2 games with the DVD drive.
It sounds to me like Sony wants the PSX2 to compete with the PC market, the $299USD Linux upgrade sounds smart; however, PC parts are so cheap that it may be better to get a cheap PC instead.
Still the Linux PSX2 will most likely to be used to run someone's web site? ;)