Thanks.
I guess in my question I was really looking for a Retroarch capable handheld.
I'll talk about that in another post in this therad.
But as far as a "desktop" or TV-connected home console system goes, I've
already started to go down the road you suggested. I wanted to get this:
https://www.thinkpenguin.com/gnu-linux/penguin-mini-2-gnulinux-desktop but
the wife insisted on an integrated optical drive so the kids could play CDs
and DVDs. Their TV is a little white CRT TV/VCR, and that part of the house
is very light colored, so the device needs to be basically white. So even if
ThinkPenguin had been selling this
https://www.thinkpenguin.com/gnu-linux/penguin-mini-b-edition-gnu-linux-desktop
at the time it wouldn't have been suitable. Anyway I ended up buying a AOPEN
MP945-VX, which is an old Windows XP knock-off of the Apple Mac Mini (back
when the Mini came with a built-in optical disk slot). It came without the
hard disk, though, so I also got a Crucial SSD to put in. It looks like a
potential big challenge to open the case and install the SSD, and we decided
that the kids had gotten enough for Christmas and we'd save this for summer
vacation or the older kid's birthday, so I've procrastinated. I've verified
it powers on (the fan is LOUD) and it can boot into 32-bit OSs from the DVD
drive. Upcoming issues: the SSD install, installing Lakka, configuring it to
work with a square screen CRT, uploading games, etc.
Yikes. It would be a lot easier to just use a PS2 (CD and DVD capability,
big game library including authorized disks of retro games), but of course
it's proprietary, no Retroarch / Lakka style UI, and she vetoed it anyway.
It would also have been easier to get one of the modded Raspberry Pi case
systems on eBay which come with Retroarch pre-installed, such as the Retro-G,
but that has no optical drive.