Well, RAM is cheap enough now that I think it's worth it to go for the newer/better chipset rather than re-use the DDR2 you've got. Unless you are on an extreme budget, that is.
Of course, DDR2 on a 785G is perfectly fine for HTPC use (that's my setup, BTW) and the performance difference between DDR2 and DDR3 is not huge. You do get a bit of power savings going with DDR3, and that's always a plus.
Dynex is a Best Buy brand... not that great but will probably be fine for a low-power HTPC build. I would be more concerned about how noisy the PSU is rather than the power output.
Your experiment sounds just like many that give people the HTPC bug. I installed a PCI tuner into a regular desktop PC just to see how it would go... and 5 years later I have multiple dedicated HTPC's networked sharing 4TB of media!
Does your HP have a PCIe slot though? It would be better if you got a PCIe tuner card since PCI is an old bus getting phased out.