So why hasn't it been done already?
Well, in some ways, it sort of has, right?
Wasn't the minimig just some dude designing an FPGA that could play all of his favorite games?
What about Natami? Looks like just a bunch of guys that had an idea and decided they would make that happen.
MorphOS, another ragtag team of people putting something together because they wanted to.
So, to answer your question, it hasn't been done already because I just said it in my previous post, I don't want to take credit for thinking it up, but, I read the entire thread and no one mentioned it. :-)