1) I've addressed this and gave you two videos - but even so, the point was to show its possible to do local co-op on a single machine at a low cost. Keep in mind, on both systems, no additional hardware was added. They used a software called SoftXpand.

2) Diablo 3 isn't a demanding game, so, I'm sure the second PC can run 3 on low to mid settings.

3) The Gamespot video showed a PC that was $566 dollars. However, who said you needed Windows to play Diablo 3? You can play Diablo 3 in Linux. Since Linux is a multi-user OS by design, you wouldn't need any additional hardware or software to set up multiple users on a single box.

Let's get something out of the way first before I continue. In the PS4 version of Diablo 3, you're confined to one screen. The screen is not split. Meanwhile, the PC is capable of providing a whole screen per player, and no one needs to share the screen. By your own admittance, the old AMD 5700 PC is capable of running Diablo 3 in two instances. That machine was very old and could cost much less than the Gamespot PC. The fact to the matter is, even that old PC is capable of running Diablo 3 co-op better than the PS4.

I can see that you're desparately grasping for straws here.

Listen, you can play local co-op on the PC using just one monitor. There's a free tool called Splitscreen PC tool:
http://forums.steampowered.com/forums/showthread.php?t=3176217

You can also use a 3D TV to use full screen 2 player gaming. So, buying another monitor isn't necessary:
https://www.youtube.com/watch?v=OqeebO_-G44

4) That's a ridiculous number you came up with. Like I said earlier, there are televisions that allow 2 player full screen gaming. Check out the video I gave you. You also assume the framerate will be unstable even after I explained to you that Diablo 3 isn't a demanding game. Diablo 3 runs on the PS3 and Xbox 360 for crying out loud. Pull yourself together, man.

Yes, it's cheaper to own a PC than it is a console. Even if you paid over $500 dollars on the PC itself, the games are cheaper, and when it comes to matching your PC to the next generation of consoles, you don't need to throw away your old PC and buy a new one (much like you have to throw away your old console and buy a new one), you just pull out your old graphics card and purchase a new one which would still be cheaper than buying a console outright.

Do you own a gaming PC? Maybe you should consider buying a gaming PC and just see for yourself how much better gaming is with it. You're just holding yourself back by confining yourself to a console.