Piece of cake then, you just need a 360 plugged into your telly in the remote location and plugged into the network.
IIRC the extenders bit of the MCE settings then walks you through the authorisation process and away you go.
That's great Capt., I knew laying all those wires was going to come in handy at some point. 
May be worth picking up a cheap 360 on the bay and having a play about with it. Just ensure you get a HDMI model if your tv supports it.
I've just fired it up 
If you're not going to be playing games HD size isn't an issue but I believe having a drive connected speeds up response slightly (stores some info rather than downloading it from MCE every time) and who knows you might decide to play a few games which is where the HD comes into it's own.
Copying a game to the HD makes it quieter, faster and saves wear on the dvd drive and disc.
But the HD are a clip on unit so can be added later or replaced with larger at a later date.
Thought the HD only stored game results or info, and you didnt play the game from the HD (other wise people would group together and buy a disk and all copy to thier HD)
Are you sating the HD (as in Hard drive) is not standard as you say it will cipp on afterwards. Mentions 250GB Standard. or are you saying tou can add a 2nd one.
You can copy the game to the hd and run it from there, the flaw in your plan being the game disc must be in the drive whilst playing similar to a pc game where the game data is installed to your hd but needs to see the disc before it will play.
The arcade boxes don't come with the hd module the others come with varying sizes of drive from 20 to 250Gb which plug onto the side of the 360. The new slims use a different type of drive module which lives under a panel on the side of the box and uses a different type of housing and connection.
The new drives just look like a laptop sata connection whereas the older drives use a proprietory ms sata connection.
Whichever you have the 360 will only take one 360 drive at a time but you can now use usb sticks/external drives for playing media/storing game info.