I think the HTPC route is the way to go. There are many interfaces available now as well. I am debating on building one. The cost of PC's is always getting cheaper, I figured I can make one to handle MP3's and video(HD too) with 250-300gb of storage for about $800.
Currently, I rip and store all my CDs on to my PC, and stream them to my audio system via my wireless network and the Apple Airport Express device (previously, I was using a Linksys Media adapter).
The Airport Express is connected digitally to my pre/pro. The sound quality is excellent. It is controlled via iTunes which is an excellent interface. There is no onscreen display as far as the TV is concerned....but that was not a deal breaker.
Although iTunes can rip MP3's, I use CDex. Song and artist information is displayed in iTunes, and there are many ways to create playlists. "Smart" playlists can also be created by giving a set of paramenters for example "25 most recently played songs" or "50 highest rated songs (you rate the songs)".....these are dynamic lists that are changed automatically.