Although I included the Latitude 10 in a proposed system topic, I would have to say I would be more comfortable if it had 4GB of memory.
But I'm guessing the 2GB would suffice if used as a music server only and disabling nonessential services. I would be using J. River Media Center which is not a big memory hog, but you wouldn't want to use 3D visualizations which use more memory than the player itself.
It would probably work fine even for Memory Play with standard songs up to 24/192, but since Memory Play loads the entire track into memory, it might not be enough for really long classical or continuous "album side" tracks.
As far as DACs and hard drives, you don't have the option of using USB for one and Firewire for the other as you would with a Mac Mini. So either you are (a) using the optional ($100) docking station stand which gives you additional USB ports or you are (b) accessing the library from a network connected NAS.
It might be a bit of a gamble, but I like the idea of a fanless touchscreen angled on its stand on top of the audio rack. Even though most will probably have another tablet or iDevice for remote control it would be nice to have easy local library access as well.
Steve