The is no outright admission from Valve that the Steam box will be linux based but Newell still refer to the hardware as a PC. Furthermore, Nvidia, Valve and some devs getting together and spending a year working to put out the R310 drivers seems a little much for just putting out Steam on Linux given the market size of linux based gaming. But Valve seems to have big plans for Steam for Linux and it makes sense if the Steam Box is part of that plan.
The market size is near zero, but there's chicken-and-egg, no games because there's no market and no market because there's no games. The technical problems have been strong too : linux is a moving target. Unlike Windows or even commercial Unix you can't run an old games, libraries versions have changed, whole subsystems are replaced etc. There were a few attempts a decade ago (Loki and Id games), those games were unplayable just a few years after release.
Terrible drivers is the other problem (also suffering from API and ABI instability)
But a whole decade later, it's maybe slightly more possible. There have been two popular long term Ubuntu versions, supported for three years : 8.04 and 10.04, now the 12.04 version is being supported for five years (i.e. security updates till 2017), also the whole OS is better quality overall and nominally usable by inexperimented users.
Linux market share is about 1%, if there are about 500 million PC computers that's about 5 millions. (in reality numbers are unknowable, and there are a lot of corporate PCs and Pentium 3 etc. which I try to account by giving a lowish number of PCs)
It's not big a market but it's a completely untapped one, which will grow. (more people will use linux or have it as main OS if they can game on it)
So the ideal of a Steam box appeals to me only because I wouldn't mind getting back into PC gaming and having a linux box at home. But I will need it to be fully supported because the thought of waiting for an answer of when or even if a port will come to linux is in no way appealing.
Linux users can be desperate for games, I basically have chess, SNES emulator (I don't even play them anymore) and flash games. And Quake Live, a glitchy version of a 1999 game.
There is Wine (running Windows games and apps on Linux) but you can only run cracked games known to run properly and you still suffer sound bugs or random issues.
I would gladly like to be able to even run a subset of five-year-old games and more recent games, and indie games, if it's all supported and at Steam prices.
With a Steam console (or box, with keyb/mouse as well as gamepad), well it would be like any console, you only get to play the subset of games that exist on it. You might not need it if you're invested into X360 etc. instead. Or you may be interested in it if it has PC-like games as well as console-like games. (plus doing media center and browsing, documents stuff)
If you want all AAA games and on day 1 though, yes you won't get that.
Linux gaming on self-built PC by users who maintain their own hardware and software, that may be an additional, "bonus" market. With Valve maybe barely breaking even from the additional sales vs support expenses, but they will be getting a captive market.