I think Valve's strategy with Linux is like Google's: develop a standard OS (call it Steambuntu) that they control, and allow independent manufacturers to use it to build consoles of their own and sell them. This allows those manufacturers and Valve to steal market share from the dominant players (Nintendo, Microsoft, Sony) that keep their platforms to themselves.
So here's my idea of what will happen. First, Valve will create their own console and perfect it. They'll make it very lucrative (maybe their latest games on it exclusively for some time). This will make people buy it, and bring in industry support (this is already happening with Steam for Linux).
However, this alone won't be enough to gain good market share or industry support. So what they will do next is to share Steambuntu with PC/console manufacturers that they have already been in talks with (they went to CES for that purpose, remember?). Those manufacturers will flood the market with lots of consoles, all of different shapes, sizes, and capabilities. People will buy lots of these consoles mainly because of their lower price point. More industry support will follow as a result.
Suddenly, Steambuntu will be a worthy contender in the console space. Of course, like Android, most people will buy cheap consoles, and as a result "experts" and "pros" will call Steambuntu just a cheap gimmicky alternative while Valve and other manufacturers work on better stuff. Soon people will get the incentive to try higher-end Steambuntu consoles, and this will eventually make it a top-tier competitor to Xbox or PS. Because of the inherent variety in the model, more people would be likely to buy Steambuntu consoles than the other ones, and this will basically end up giving Steambuntu the front seat.