I'm in the middle of a basement remodel. The walls are finished but I have an opportunity to hide all my components in a closet away from my display. I'd like to get opinions on the pros and cons of doing this. I see cost as the biggest negative, as I need to purchase fairly long cables and buy an RF remote. The plus is that they are out of sight. The other negative is that you just don't get to see whats functioning and whats not without getting up and going to the closet. If there is anything that I haven't thought of your comments will be greatly appreciated.

Thanks

I have mine in the closet and I love it like that . It is out of site and I cant here anything. Insted of building shelves I went and picked up some vented black and decker shelfs and put them in the closet for the rack. The closet is painted black to match the shelf and equipment. I love it and nothing gets hot, even after running them for 12 hours as I did last weekend. I Also had to get long run cables but it is well worth it. checkout monoprice for your cables, you do not have to go no where else for cables. Very good quality! hope that helps. How big is the closet mine is 36" wide.

You have already pointed out some of pro's and cons. To avoid needing to go with an RF remote, you can install a IR Repeater System with it's receiver being located up at the display location. This way if you already have a nice IR Remote that you like, no need to replace it with an RF version. You can find complete kits for around $100 though the price climbs if you need one with a IR Receiver that is "Plasma Proof".
Here is an example:

http://www.smarthome.com/83608.html

What A/V Receiver do you have? Any chance that it has an OSD feature?
With On Screen Display you will have visual reference when making adjustments or changing inputs of the AV Receiver.