Well as far as RPG's I'd recommend.

Alundra
Breath of Fire III
Breath of Fire IV
Chrono Cross
Dragon Warrior VII
Final Fantasy VII
Final Fantasy VIII
Final Fantasy IX
Final Fantasy Chronicles
Grandia
Lunar Series
Persona 2
Star Ocean: The Second Story
Suikoden
Suikoden II
Tactics Ogre
Thousand Arms
Vagrant Story
Valkyrie Profile
Vandal Hearts
Wild Arms
Xenogears

If you do get a PS2 I'd say try the MGS series (granted I think you said you dislike stealth).  I believe the Essential Collection is $25 at Circuit City this week, and for 3 games you might as well try it out.

Why do I bother? 

 Facts? Can you please provide a source to this fact? If the man is going to make a large investment in a system the last thing he needs is fanboyism bias constituting to the process.

As for the OP; imo you need a PS2 unless your a MGS fan or are willing to invest in a PS3. Buying games for software that isn't out OR that you yourself haven't gotten to play and get a feel for is a major no; if you want to test out the 360's lib... go to one of your friends house(you say your friends have one) and test the games you think will make the system worth a purchase. The only other factor is the PS3 will make that HDTV of yours get so much more use than the 360(use as in using the high resolutions); with the 360 unless you have the HD DVD player addon there will be no HD at all, but the format is discontinued so it can't double as a media center. 

 Any possible way to prove PS3 is overpriced?

Last I checked the lowest model PS3 was $400 and still offered more than the $350 360 that also requires another $50 for online making it not only the same price, but without the BluRay, WiFi,  Remote play, Free online, the list goes on.

In actuality, whether you believe it or not, 360 is more overpriced than the PS3.

Mention the arcade and it gets even worse considering a 20GB 360 HDD is what? $100?  Still making it inferior to the PS3 in terms of what it offers.

The price argument has been invalid for a long time bro.

Then what happens if the 40GB does indeed get BC? Don't say it won't either. PS2 after enough time ran PS1 games on software only. As it does with the PS3 now.

Want to know what overpriced is? Wii is sold for profit, 360 is sold for profit. PS3 is sold at a loss, meaning it is not possible to say it is overpriced.

Also in terms of library at the moment, it is all a matter of opinion. 

I don;t see why people would tell the OP to spend $130 on a PS2 and $350 on a 360. Way to spend $480. $20 more gets him his BD player for his HDTV, his entire list of PS2 games on the 80GB PS3 (which PS2 RPG lineup destroys the 360 lineup, no RPG is worth a system purchase right now).

Personally to me, in terms of what he is looking for, 80GB PS3 is the way to go.

ahh, good old fashion logic, something starcraft will never understand.

I said we don't hear of units manufactured after October breaking down.  If you have some evidence to the contrary show it now.  I didn't say it doesnt happen, I didnt say it wont happen, I said it isn't happening at any rate above and beyond normal console failure rates or we would have heard about it.

Whether or not the PS3 will give the HDTV more use is completely circumstantial and subjective.  The 360 has more highly rated games, and the OP isn't sure he wants Blu-Ray.  The 360 can upscale DVDs just like the PS3 can.  The thing that stops the 360 "doubling as a media center" is a lack of Blu-Ray?  It has a far superior film download service than the PS3, better windows streaming and better online.

Go figure. 

Read my post.  I was talking about games.  Given the PS3 has only just gotten (MGS4) one AAA exclusive and is still at a minimum of $400 (but they are trying to talk him into buying the $500 one), it is massively overpriced.

Overpriced doesn't refer to how much a company does or doesn't make, it refers the the value a consumer can get from a purchase IMO. 

Blu Ray = Non issue. Seriously if I don't care and I sit 4-6 feet away from a 53" Sony 1080p LCD, and im a bit of a graphics whore.... Why should he?

You can go on and on about free online but its a lonely experience online if his friends are on Live now isnt it?

Games will be cheaper for him if he can borrow some of his friends back catalogue, so he can play a lot of games for essentially free and the biggest cost of a system is actually the games you buy for it.

It doesn't matter if the list price for the PS3 is lower after you add in all the "extra value features" But isn't the point of a gaming machine - playing games and having fun. Since he likes the 360 controller more and has friends with Xbox360s - You have friends you play with online I hope? The value of the machine would be far greater than the PS3. I personally would hate to be the one with the odd machine out.

Value =/= price divided by features.

 There is your problem. What you think AAA means is wrong. Look at his PS2 list. According to you that entire list is not AAA.

AAA is only determined by those who purchase the game. Not some site like Metacritic or Gamerankings that majority of the gaming population couldn't care less about.

You really think having more 90+ rated games means a system is better? Even when those ratings are done by people who's taste differ from the OP?

You know how many games were rated 90+ and recieved the all mighty AAA status and wind up sucking hard? We all know reviews can't be trusted these days so the AAA argument is moot.

He also enjoys RPG's from what I have seen and the PS2 library blows away any RPG released on the 360 thus far, and I know as a life long RPG fan and owner of just about each mediocre to high quality 360 offering at the moment.