You're not going to get a Zino with the BluRay drive (which also requires the discrete 4330 graphics card) and hit that price point unless you wait for a particularly good sale at Dell (which is possible -- they're doing their "Days of Deals" right now, and the last time they did that I picked up a Zino at a steep discount).
The form factor is fantastic, and hard to match with DIY components even with an ITX mobo and case (particularly when you factor in the full size HD and the card reader). One potential drawback to the Zino for HTPC purposes: the audio outputs are just 2 channel stereo (RCA jacks). There's no separate digital out, or analog surround/center/sub. That shouldn't be a problem for most people because the HDMI output will carry the audio, but if you're not plugging into an HDMI-equipped receiver or want to do something unusual with the audio you're out of luck.
Unfortunately, the first revision of Zino's had a bad reputation for overheating. Might want to stick with the new ones just to ensure you get a later revision.
Interesting. Do you have a link with more details? The one I got seems to run cool enough (22°C to 32° idle, 45°C to 55° while busy though I haven't stress-tested it). One core always seems to be 10 degrees higher than the other, which is strange but could just be sensor calibration: the sensor on the hard drive tends to agree with the lower core reading. I've never heard the cooling fan. But I very well may have got the later revision: I ordered it back at the beginning of December, but they didn't ship it until after a long delay (some of which they told me about when I ordered, and some of which went week to week with no progress on the order for quite a while). A revision would certainly explain that.