my HTPC consists of an intel 2.4ghz p4 in a cheap compaq D51 pc, with 1gb ram and a x850xt agp video card. using s-vid out because component input on my tv is not high-def input and so is not compatible. picture still looks fantastic, just as good and better then a cablebox or straight from tv. im also running vista hp, i know that scares some people but it works great believe it or not. i havent watched many dvd's yet that would be no problem, even with two tv shows recording at once.
and yes mc does hdtv, and since over-the-air is likely what you will be using there will be very little load on the pc because OTA is fully streamed and decoded, no processing necessary. the only catch to hdtv tuners for mce is that many are 'hybrid' tuners and cannot use both the digital tuner and the analog tuner at the same time. you can only program mce to natively use one or the other. hacks are available to use both, but they cripple some program guide functions so its not the prettiest option. best best, and costly one, is to buy one hdtv tuner and two analog ones. that way you get one high def selection that can run on its own and two full cable selections. if you miss a program with all that you watch too much tv.