"You got to buy a"
Many TVs have a USB port on capable of powering it. So £1 for a cable.
You reckon? Phones/tablets do a lot for remote control. Still £1 for a nice enough mouse actually. Seriously, I have a bunch of poundland mice in service, they will never be gaming or graphics editor grade but they are optical, feel OK and have a scroll wheel.
Again I am not sure it is necessary and I have not seen a £1 keyboard so I might have to contemplate this. That or consider that most serious things here are either done over SSH or have an on screen keyboard.
This is tricky as to whether I go bluetooth, 360 USB or something else, or did you mean media remote. I do splash out for remotes here if I can not reliably expect network control just because and I don't know how cheap they can go. I would say HDMI cec but that is a bit of a joke.
"then you gotta download and install an OS, emulators, roms."http://www.berryterminal.com/doku.php/berryboot
"I can't believe you'd rather give your parents this:"
That case is poor, I would have hoped they had at least heard of acetone washing but eh. Crappy 3d printing is not the only option either http://thepihut.com/collections/raspberry-pi-cases?sort_by=price-ascending
differs from commercial in only that they don't have mould marks for CE and whatever else splashed over them.
Also a device that also doubles as a serious media box and also does OK at web browsing, maybe netbook grade useful and streets ahead of any "smart" TV. This vs similarly priced system for limited amount of older games only.
Granted my parents/grandparents either taught me a significant chunk of what I know or are used to it from me, however I would still say it is viable for those that would colour match their DVD player to the TV.