[Stuart]

Yep, and not only would the extra encoding reduce video quality (probably noticably, especially on large screens), but would add extra to the cost of the box.

Even though the chipset is only a couple of pounds for each box, bear in mind that the reason a lot of PCs don't come with firewire (despite nearly all consumer camcorders and Mini DV recorders using Firewire) is that the cost of the chipset and licencing adds a few dollars to the cost of a motherboard.