Hi Phil. The only downside might be Powerstrip to be installed and a small comfort level with computers to install XP and set up the Radeon Catalyst drivers and install DX9. The H3D installation is straightforward itself, enough so that when I installed mine, I was left with a "that's it?" impression. Way too easy but you need follow the instructions to the letter.
One other downside is the pricing but there's a new H3D-II coming out and I expect there'll be H3Ds being sold off. (One in the private sales section right now at $300 USD. Absolute steal at that price and puts a H3D based htpc scaler on price parity with a software based player.) The upside to the price is this needs to be balanced with no need for a soundcard, keyboard, mouse, dvdrom or cdrom. You will need a keyboard, mouse and cdrom to setup the computer but these could be temporarily liberated from your desktop pc. I, like Chrispy have no keyboard or mouse attached and the Powerstrip and H3D software set to autoload upon bootup. Another upside to the H3D is the potenial to gain even more picture quality if desired later. Have the Radeon video card modified with a Mike Parker MP-1 mod and you could also have that dvd player of yours SDI modded to feed the H3D. At a friend's place, Petermwilson brought over his RP82 with SDI where it slightly bettered an expensive player costing 3X. Aweful lot of bang for the buck. Also nice that one can do these additions over time to ease the strain on the wallet if need be. Nice to know there's upgrade room even if you never take advantage of it...
And a last interesting advantage is the H3D computer needn't be be fast. Excellent results can be had with an older PIII system. While I used a Celeron 1.2 Ghz and a Tualatin 1.13 (underclocked to 800 or 850 Mhz), I'd bet a PIII-600 system would be fine. However, as Ray mentioned, the new high def Window's Media Player T2 Extreme Edition will require a fast P4 system. Might throw a wrinkle into my htpc setup where I wanted quiet and cool ruunning and the money was directed at the H3D, MP-1 and soon to return home, SDI modded RP82. I'll be trying this out on a new P4 2.8 desktop system I am assembling right now. It might just mess with my satisfaction level of my current configuration of my htpc....
A progressive dvd player on that Sony is wasting alot of it's potenial!