I am currently looking into a XBMC system that supports HDMI CEC, 1080p and turns on and off with the TV ( possibly powered by the TV USB ports). What do you recommend?
Pretty well, I mean, it's not going to be as fast as a full blown HTPC. I'd suggest openelec it's a lightweight xbmc build made for raspberry pi. It's good enough to stream 1080p if you have wired Ethernet.