I think the idea is right, but I still think we're behind with game engines and tech. Once tech matures more with Tesselation and better texture scaling tech.

Different hardware performance levels on an Xbox 360 would be the destruction of consoles as a concept. You'd literally be buying a premade branded PC off the shelf.

I don't think thats the case at all.

The definition of a console has been rapidly changing especially this gen where it's already become very "PC like" in terms of gaming and apps. Considering that this premade PC you're describing would only play games and would not run Office, Photoshop ...etc, and that it would still provide a locked controlled experience, I don't see it as too far of a strech. 

double post darn it!