If you do put the equipment in a cabinet or closet you will need a way of controlling them. Furnlite makes an infared repeater that controls six pieces of equipment. The infared eye is very small. Only requires a 1/2" hole. I don't think they show on their website yet. Sligh Furniture, http://www.sligh.com/sligh.php, uses them on their entertainment pieces. Here is a link that might be useful: FurnLite

Ah, come on now, you don't like the sports-bar look?! You simply need to select a location for the equipment, whether viewable or hidden, that has AC power and where you can fish the A/V cables through the wall back up to the television. You then install an IR repeater, or also sometimes called an extender, which consists of an IR receiver, small interface box, power supply, and IR emitters. The IR receiver is typically placed discretely near, or just behind, the television and the emitters are placed in front of the equipment. The interface box/power supply are also connected at the equipment end. The wiring for the IR receiver is fished along the same path as the A/V cables. Now when watching television, and you inherently point the remote at the television to change channels, the IR signal is transmitted over the wiring, through the interface box, and to the emitters, and you have full control of your cable box, DVD player, etc. Neat, clean, and sweet!

Unfortunately, this is probably not a good DIY project for a beginner. You have three choices: 1, Go straight through the wall and have exposed coax cable fastened to the exterior house wall. 2. Fish down from the attic. 3. Fish up from the basement. The cable company will probably do this job for less than $100, if you are willing to go with option 1. You see this route taken all the time because it is fast and easy to do. I will never do this on my house because it usually looks very unsightly. Most cable companies won't even tell you options 2 and 3 even exist. Options 2 and 3 may or may not be possible and will cost ~$50 more. Do you have access to the basement and attic? Fishing an exterior wall is always more difficult due to insulation which is present in exterior walls, but almost never in interior walls. A wall fish will take longer and will require an installer with patience and experience. I'd call your cable company, tell them you need a "wall fish" outlet installed and hope you get a patient and experienced installer. Sign up for an early morning appointment. You don't want to be the last job of the day when the installer is thinking about dinner time and is eager to go home. Good luck.

With the recessed shelf under the TV, it seems like your TV will be mounted very high. I would buy a freestanding media console and put it on the wall where your wife wants to put the box. Mount the TV on that wall above the media console on a full swivel motion mount. You can pull it out and angle in the room when you're watching TV. The TV can also be mounted at a more appropriate height for comfortable viewing.