>We also have a netbook hooked in the loop [...], and for the most part we watch TV online streamed through that.
This is what we do too (although we don't have a dedicated machine for it, we just plug in one of our laptops when we want to watch TV).
I was really surprised when I started doing this, there is so much content online for free.* I've even been streaming playoff games in HD (from cbc, that probably only works in Canada). We also signed up for Netflix ($8 per month) and use the hell out of that. We're currently watching through Arrested Development and Breaking Bad. We watch a lot of movies too.
Also the Boxee software has a free desktop client, but it's a little annoying since it's designed to work with a remote and you don't always have a proper mouse.
* Where free is quantified over the ridiculous cost of high-speed internet plans.