I would get a bigger screen, at least 27 inches.
+1 on re-mounting the dvd drive, that is what I am doing. A couple of things you will run into:
1) The cable that goes from the drive to the xbox is proprietary and only like 4 inches long, so you are going to have to hack it.
2) If you plan in hooking the xbox up to XBL to play online, NEVER turn it on without the dvd drive being attached, and especially NEVER try to go on to XBL without a drive attached, this will flag you for ban from what I heard.
3) The eject button for the drive is wired to the motherboard, not the drive, so you need to solder a switch to the motherboard to eject the discs, or rely solely on ejecting discs through the dashboard.
4) I would hide it behind the coin door, makes it easy to swap out. If you want to put the drive somewhere else, you are going to need some creativity. The drive itself is ugly, not the kind of thing you want to just have out in the open.