Apple TV Running Full Mac OS X
AppleTVHacks posts a tutorial showing how to boot full Mac OS X on the Apple TV, along with keyboard and mouse support.
At this time, the 14 step hack requires opening the Apple TV, installing Mac OS X on the hard drive, and modifying some Operating System files.
It does, however, represent the ability to convert a $299 Apple TV into (what appears to be) a full Mac OS X machine. They also point to a Video as proof of the hack.
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