Why would it need a lot of power if it would stream from steam? Did I read that right?

This.

Lets wait and see, the announcement is a couple of hours away :P

Beating a 7870 GPU is not going to be a big deal. 1.8 TFLOPS is easily beatable especially if Steambox is not rolling out until next year.

If it's not cheaper than me building my own PC with the same specs, I don't see a reason for getting one.

It's not meant as a PC replacement.

Years ago, the idea was that people would no longer have stupidly fast PC's, but instead a singular PC that did all the heafty lifting and allot of clients.
This is another take on that idea.

Essentially, my Desktop (Which is more than capable of running multiple AAA games @ 1080P) will do all the processing and stream it to the Steam box.

nVidia's Shield is another take on this idea, where the PC will do all the processing and display it on the shield device.

Thus, in theory you should never need to upgrade the Steam Box or nVidia Shield device, only the one machine that does all the heavy lifting, I've actually taken this concept but use it for movies and television shows where my PC transcodes all the video on the fly and sends it to all the different devices in my home, be it the Xbox 360, Playstation 3, Windows Phone and such.

http://store.steampowered.com/livingroom/SteamOS/

Just think on that potential for a bit.
Imagine you had the origional Xbox, you could mod it, install Linux and then use your PC to do all the heavy lifting which allows the console to display games that even puts the Xbox 360 to shame, image quality wise.

To summarize, it will be a pointless add-on that makes little to no sense to purchase save for an extremely niche audience. I'll need to look into Steam Box deeper, but it sounds like a terrible venture.

....ehhh

While Valve isn't as big, they're sitting on a lot more profit than Sony is.  They could afford a loss leading console a lot easier.

Well it would better not have DRM =p.

That's because they're privately owned, they don't have to release financial info.  

What is known is that they make way more moey per person than google or apple.

They're essentially all profit and no cost... well outside this box anyway.  Which I doubt they're even planning to do Xbox numbers with at first.  

Gabe Newell might be the most "secretly" rich guy out there.

Plus they would have an amazing credit rating.
Additionally, they are a private company, so they don't have shareholders who constantly bark for ever increasing profit margins, which is also why they can get away with those rediculous sales which even cuts into their own profit margins.
That and they don't even have to pay for all the bandwidth that people use when downloading steam content, internet providers around the world host Steam content on dedicated servers near their content delivery networks which reduces costs for all parties. (It's cheaper to grab something next to a network rather than across a country or the planet!)

Possibly, but you aren't looking at the big picture.
Imagine playing AAA games on a computer that only costs $20-$50 at full 1080P, even games from this coming next generation of consoles.
If Valve ports the SteamOS to a device like the Raspberry PI it would be a game changer, you could essentially have the power of a high-end PC in every single room of your home for just $20-$50.
Would it catch on and become popular? Well. I too have my doubts, but stranger things have happened! I personally look forward to this and retiring ALL my PC's except my main machine which will do everything.

So in the end, the Steambox has the potential to have more power than the Xbox One and Playstation 4 combined if you so wanted. :)