You really don't need the graphics card. The integrated GPU is plenty for a HTPC and BluRay playback. I would use an i3 and H55 if I was making a HTPC. The integrated GPU on the i3 systems can bitstream TrueHD/DTS-HD MA over HDMI. They also use less power. Here's a couple very nice combo deals:
AMD have officially announced their latest chipset, the AMD 890GX, which incorporates integrated ATI Radeon HD 4290 graphics as well as paving the way for the company’s upcoming AMD Phenom II X6 hexacore processor. Out of the box the 890GX chipset will support 1080p HD Blu-ray playback, including picture-in-picture support, in addition to SATA 3.0 6Gbps interface and USB 3.0 support.
If you’d rather pair it with a separate graphics card or two, the AMD 890GX supports ATI CrossFireX technology. Still, the basic integrated graphics are enough to upscale standard-definition DVDs and support DirectX 10.1 gaming, as well as decode the MPEG2, VC-1 and H.264 video formats.
I wouldn't downgrade to 2GB of RAM, especially since he's going to be running 64-bit Windows 7 Ultimate. That brings up another point. Do you already have the OS? If not, Ultimate is a huge waste of money. You can get 64-bit Windows 7 Home Premium for $100.