The press release is vague enough that it could be some sort of OnLive/Gaikai streaming service, but I don't find that very likely at all. This sounds more like presenting Steam in a much more HTPC friendly way.
I have a pretty modest HTPC that I primarily use to stream media off a NAS. It's powerful enough that I can run Mass Effect 2 at max settings on my 1080p Plasma, and I've done local co-op on Street Fighter 4 as well. It works great once the game is running (and yes, you can use a mouse/keyboard just fine from a couch/comfy chair with some preparation), but using Steam is an absolute chore at 1920x1080 on a 50 inch display from 15 ft away. So an improvement there would be absolutely awesome for me.
HTPCs are a niche market but genuinely great. I'd love to see more local co-op/split screen in PC games as a result of a big platform like Steam catering to that market.