No it doesn't!!! look at ps2 games on ps3, there is up scaling and various enhancements, maybe not super good ones but, the second chip could be used fora few enchantments here and there. maybe even off load a few common or well known api calls to free up some cycles to get a few more FPS etc etc.
in case you didn't know they are selling 200gb and 256gb micro sd cards. let me know when they start building phones with that much internal space. You'd be surprised how manys gigs a recording for a several hour lecture/training session can take up in 720/1080p.
I have 480+ steam games. I like to game on the TV, in fact i have an HTPC hooked up to the TV. It is especially fun with games like Castle Crashers and other various retro style and local co-op games. You're right though, it's not streamed. I guess it was just easier to use old phenom 2 six cores and core 2 quads paired with low profile GTX 750 TIs.
Of course I'd run fans for sure. The idea was overkill is all i was trying to say.. However, in theory with enough rads you wouldn't actually need any fans nor any excessive heat or heat build up but, you need a LOT of rad(s). I would hop with dual 360s and low fans RPMs it'd still get good temps.