Right now the AIW Radeon has a list price of $300, and you can find it Online for $176. This is about a 40% difference in price. We can safley assume that the Radeon 8500 AIW will be around the same price shortly after it comes out (within 6 months). This will place it in the $250-$300 price range.
As for all those features, you will have to understand what ATI is trying to do with its AIW line. The main goal is to unite the TV and Home theater experince with that of the Computer. No other company has dedicated so much resources and will power, whether you are watching TV on you screen, sending the video signal out to a TV monitor for playing big games on, or running DVD video, other than ATI. Their goal is about to take a huge step forward with the new AIW, mainly that you will not be limited to sending the signal out through S-video, or composite output, but through the HDTV format Component Video output. In this, ATI will be able to say that it has a mainsteam product that can seamlessly converge both the upgradablity and customization of the computer, and the big picture, big sound and features, of a true Home theater. You may never use the all features that come on this card, such as the remote, or the firewire, and for that, I would recommend you stay away from the AIW, but for those who have been searching for an inexpensive way of converging these two worlds, ATI is a God Sent.
If it works for you then don't fix it.