The intel G45's that are just barely rolling out are supposed to be a good option for HTPC's because they support hardware acceleration of blu-ray video just like the 780G's. Maybe consider a G45 if you really want to go intel.
On the other hand, AMD is the cheapest way to go and might fit your $500 budget better.
For a small form factor case, check out Silverstone's SUGO's, Antec NSK1380, Aerocool M40, Ultra Microfly, etc. for decent cube cases. Alternatively, there's a huge selection of cases that look like A/V equipment. Go to www.pcalchemy.com for some ideas there.