I Understand you have lots of space and such, but the lower power consumption of the Atom processor means you could play music for longer on the battery. I know you have two big batts, but they aren't unlimited. The atom draws ~40 watts fully utilized, compared to at least ~100 watts for a newer core2duo.
If you want all the flexibility of a full OS, then its not an embedded system. You could still go with either Windows or Linux. Windows 7 rocks and is probably what you are familiar with. If you have a student email address (.edu) you can get the Home Premium version for $30 right now. Linux is a great OS with some advantages over Windows, but there is a pretty good learning curve to it.
Newegg does have a case and Atom MiniITX board with a single PCI slot (full height).
Just my $.02...