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That is a pretty packed machine, but I would avoid that if possible. Full size cases offer better airflow and cable management that just can't be matched in the small form factors. IMO I agree that a mini ATX system is a good compromise. You could make a system that would fit in a media center for example.
FWIW, my solution is a small form factor PC (Acer Aspire Revo 1600) with a gigabit LAN connection to a NAS box with two 1.5TB drives. Hardly elegant, but effective and compact.
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