From the report, it looks like the unit would be a 1.25GHz G4-based device with a CD-R/DVD player built in. Presumably, there would be some room for expansion, perhaps to swap out the optical drive with a DVD burner or something of that nature. It would come with AppleWorks, Apple's consumer level office suite. Additionally, it would come with iLife, Apple's suite of consumer level multimedia applications.
Personally, I say the more people who try OS X, the better, but I'd rather that first experience be with something a little more powerful than a stripped-down unit. OS X needs 512MB of RAM just to operate correctly. Additionally, the difference between a G5 and a G4 in just the basic performance of the OS is remarkable. I've been blown away by the speed difference between a 1.5GHz G4 Powerbook and a single-CPU 1.8 GHz G5 Powermac. That said, a headless iMac would be a welcome addition.