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Go for a full fledged desktop gaming PC.

I think the specs for the Steam machine will be lower than what you can get for a typical $1,200 to $1,400 unit on Black Friday (Assuming you are in the US) and the Steam machine's likely gonna be a $800 to $1,000 unit, might as well spend a couple of hundred dollars for something more substantial.

It'll be a better long term investment.

Also dont just go in for emulation, Steam alone has a lot of games especially with third parties, a lot of remasters and ports not seen on consoles that were released on previous gen systems are on Steam.