I'm another htpc owner who's not a big fan of windows media center.
Primarily, I use boxee or xbmc. At the moment, I'm using xbmc since it handles dvd playback and content indexing better and is more stable/smooth running, but xbmc also prevents the cpu from idling. (a throwback to its xbox origins on an os that didn't support proper multitasking) XBMC does have some limited tv watching capability by using an hdhomerun.
Once boxee comes out of beta, I'll probably switch back to that. Having netflix + hulu + fancast streaming is very nice content wise, you wouldn't even need a tv tuner. (maybe an external hdhomerun to stream from)
I have windows 7 media center set in the background to wake up and record tv shows I'm interested in them. I then have MCEBuddy (just found this program, it's fantastic!) set to wake and run in the background to automatically convert the giant .wtv files to h264 (avi?) files and dump them into folders (arranged by tv show automatically) for xbmc (or boxee) to index. I need to get another program I think to pick up metadata info though. (maybe metabrowser?)
Still, even if you don't just use windows media center as a video recorder like I do, I'd recommend getting mcebuddy. There's absolutely no reason to waste 6GB of space on an hour long tv show.
I also have PowerDVD 9 set to start automatically if a bluray disk is inserted, but I usually just watch blurays on a $100 player.
My favorite setup was mythtv (mythbuntu), running boxee or xbmc in the front. I used the web interface to schedule shows, and had mythtv automatically convert and dump them in an appropriate folder. Still, the lack of netflix streaming, bluray playback, and games made that less appealing, and my current tv tuner doesn't have linux drivers anyway.
The thing that makes it all work well is having a good wireless keyboard and remote. I use the gyration media center remote, it's a combination mouse and remote and it really makes the whole experience a lot more usable, I'd recommend it to anyone who can't find one program to do it all. There's even one that lets you make music playlists directly from the remote, it has a little built in lcd screen.