I would also suggest looking into OpenELEC as the XBMC OS.
It boots right into XBMC super fast.
Its well supported and perfect for a HTPC that's just playing movie's and stuff.
Personally, I know a lot of people here would disagree, but if you have the cash spending a bit extra on good HTPC components will A) future proof you, B) help to make playback as smooth as absolutely possible.
I think an i7 might be a bit overkill, but like an i5 or something would be a nice happy medium.
If i was building a kick ass cinema room, then I would personally get the best, eg i7.
But it largely depends on how much you are spending elsewhere.
If you find that you specced out the rest of the kit, and have alot left over then a good HTPC is on your list.
But if you find that you have only a bit left, then an i3 or i5 will do really nicely.
I know a lot of people wont agree, but that's just my view
Also bear in mind that Linux does not support Blu-Ray playback.
There are some ways to get it to work in OpenELEC or Linux, but you don't get things like Java menus and the real full blu-ray experience.