You should be fine with that set-up.
I know you said that you don't want to spend the extra for a Regor dual-core, but if you do, your system might last a little longer. Ultimately its up to you.
2GB is enough ram for an XP HTPC.
You are correct in your assumption about the onboard video/sound of the mobo, they will suffice.
A blu-ray player will work with the set-up (even if you keep the sempron).
All in all, the set-up you have planned should serve your purposes.