Getting away from the HL3 talk, in a lot of ways the Steam Machine is what I had wished for with the other consoles, namely an upgradable, multi-tiered gaming system. But there are some huge open questions.
Price. The chances of the systems being sold at cost like the PS4 and X1 is virtually nil. They are made by manufacturer's who need a profit. And even if Valve gets in manufacturing, they'd be system integrators only, not OEMs. So even the weakest Steam Machine can't be price competitive with the consoles. It'll be PC prices.
Components. If there are too many allowable parts, no one can code "to the metal". Valve would need to only allow one GPU/x86 maker or the other, basically saying, "This is an Nvidia GPU/Intel x64 box" if they want to allow lower level access--CUDA, AVX2, and NVidia's own future "Mantle".
DRM. Because Valve's system is more or less the original XB1 system, will there be an outcry of "no used games" and "required online checks to launch a game"? And related, if it is targeted to console buyers, would they not complain about no Blu-ray (assuming it doesn't have one) and inability to buy games at Gamestop/Walmart?