Wow. this is EXACTLY what I just bought my new mini for!
I have a decent home theater setup and wanted to use the mini for music. After searching high and low for a mini-toslink to toslink cable (apple store was out of stock) I finally got my mini plugged into the Elite 82TSX. For video I bought a DVI-HDMI cable and the quality is outstanding on my 50" Samsung 1080i. The deciding factor for me to buy the mini was Front Row, if you haven't checked it out yet.. The mini came with a simple 6 button remote which I was able to program the self learning remote on the Elite to take over for. The GUI w/ front row is much more "home theater" feeling which is what I wanted. I didn't want to have to fumble with a computer mouse just to play music. Apple Lossless is perfect, I've even been experimenting with DTS files and playing 5.1 surround encoded music through Front row. I'm happy with it. The only thing I wish the itunes back end supported was FLAC format, Apple lossless is great, but I have a couple hundred gigs of FLAC files that itunes won't read, I CAN play them through VLC, but I want to stick with the super slick interface that front row offers. As far as quality, the mini with an optical cable will give you ten-fold better sound than an ipod. My receiver has an ipod cable and the music sounded horrible.. the mini with the digital audio connection playing a decent ripped MP3 sounds great.
On another note, which Polks were you getting? a friend just bought an all polk setup and he's a little disappointed. He went with the Rti10's I believe and a 505 sub. I went with all Cambridge Soundworks, and we both aggree that the Cambridge sound a little nicer. Not to mention the Newton P1000 sub will rattle the 505 right back into the box it came out of. 😉
Good luck with your setup, buy the mini, you won't be disappointed.
Ohh, I should mention, the only problem I'm having so far is, whenever I play a DVD through front row, it changed my video output res, and surfing the web @ 1920x1080 is REALLY difficult because every thing's so tiny. Also, some times when I come home and fire up the receiver, it doesn't recognize any video input through the HDMI even though I've set my power settings to NEVER sleep, the only cure is to hard boot the mini. :-/ I'm hoping someone here will have a solution.
GL.
-Dom