It's fine DasFool, it's been the norm as of late.
As for the dev'ing on the target platform, I'd say it be interesting for a smaller game, but For game that require vast amount of asset management, editing and such; a bigger screen is definitely needed. This is where the TV-out comes in.
I would say you could use a video monitor or HDTV with S-video out and you can either use it as a portable computer with full keyboard, tablet, mouse, OR just maybe use the system and have a software suite optimized for the system that can maybe work in the higher resolutions?