Can a mac mini run a recording studio.

Sure, a small studio.

It would have to be a mini studio and if you've got any big idea's you can forget em!

Hey Metal,
Depending on what you want;
If you expand the ram to 2 GB, buy and external HD 7200 rmp (mini's internal HD is 5400 rpm only) for audio and a audio interface, you can have a nice home studio for recording with Express an make your demos no problem.
In my advice you should buy the best machine your money can get,
first you have to write down your needs; like how many audio tracks you need to record at once, very important to choose the audio interface; or a midi controller in case you going to use that and virtual instruments, booth?

As an example I'm telling you what I'm doing; I've got a imac 24" full of ram and a Firewire audio interface with the two inputs, as I only need one or two for stereo at the time and mostly use virtual instruments, so I'm running ok for the work I need.

"If you wan to to race buy a race car" ie a MAC Pro, Logic Pro, loads of ram and HD multi input audio interface Etc.
Peace,

Jorge

Add an outboard soundcard (firewire, USB2) and an external hard drive, and you can do plenty with a Mini. The Mini is essentially a laptop in a box - and pros have used PowerBooks and MacBooks to do pro recording. As with a laptop, you need the extra storage and faster speed of an outboard hard drive... but you can do a lot.

...and definitely the added RAM that Jorge suggested.

A Mac mini is good for a basic studio.

I use LE7 with a Core Solo Mac mini (512MB RAM).