@Rick P. (raphoenix), it feels like you are straying off topic here. We are supposed to be helping Hydro with his build not talking about how we would do a build differently.
@Rick (Hydro): the updates you have made look good to me. As far as doing some video processing, your dual-core CPU will not disappoint. A quad-core, such as the Q6600, will be able to process more threads in parallel, but the Wolfdale will finish it's threads faster. Also, you never get perfectly parallel tasks, so a quad-core is not 4x faster than a single-core, nor 2x faster than a dual-core in practical applications. You will be happy with the Wolfdale.
Regarding the GPU, the Radeon 4850 is an excellent choice being a modern chip with lots of power and features, but at a sweet price point. As the blog posting I referenced above said, GPUs will be used for image processing and I believe it. A good GPU is worth investing in.