I think any case I get will have to function as a tilt stand. Ideally, something like the apple case, with a little more tilt, with the exterior a nice leather.
He's using an onkyo ND-S1 as the optical dock. I wonder if it has enough juice to charge the ipad. It also runs on AC, so this install is going to get messy...
I don't think there will be much change in the 2nd gen device, honestly. The camera will probably be it. Maybe some case refinement. I think 4:3 works better than 16:9 would have. I think the main updates will be software. I think the lack of additional slots/expansion etc is just apple's esthetic. The dock is there for that stuff.
They're not doing anything proprietary, they're using applications to be the front end for standard back ends. Microsoft made their changes in the "standards".
I'd just plug in the N router into the cable modem, and add a 2nd network. Use the existing one as a guest network, and the N for things that need the better range and speed.
I'd think as long as you have adequate viewing angles to see it in the alcove, you're fine. Heat might be a concern, but considering the cabinets tvs get put in, I'd imagine airflow is better in the alcove than in a cabinet