This seems like an absolute disaster in the making.
$100 gets you a console and a controller. Take out kickstarter fees, amazon payment fees, taxes, shipping, and the cost of the materials and they'd be lucky to break even. And that's not taking into account labor.
Why on earth would a developer support such a system? It's hard enough to make a living as an indie developer on a popular storefront like Steam, the iOS App Store, XBLA, PSN, and Wii/3DSWare. Targeting a small fraction of an already fragmented market (Android) is just asking to fail.
And I'm really not seeing the appeal of the hardware specs. All the low power of a cheap phone with none of the portability!
Best case scenario, the system actually comes out. Nobody makes any real money with it but the hobbyists have have fun messing around.
Worst case scenario, the kickstarter is a scam and the people take the money and run.
Most likely scenario, the kickstarter is being run by naive individuals who don't realize how big of a task they're proposing. They get all this money and then realize they can't deliver and then desperately seek additional funding to actually do what they said they were going to do in the first place.
EDIT: Or to put it another way, it's hard enough to talk people into supporting the Vita and that's a portable system that has sold over a million units and has the backing of a major corporation. I expect the Ouya will do considerably worse than that.
I think people are overestimating how much this is going to cost to make. Someone posted about $50, that seems pretty likely. After the fees (which will take about $12.50 off out of the $99) and shipping (another $10-12 probably) they've got a small margin.
Bear in mind, while these aren't household names, exactly, they do work in the industry and if they tried a scam then they likely would be blacklisted. Brian Fargo for instance, apparently invested some of his own money and appeared in the video - he's planning on doing a Kickstarter for a new Bard's Tale after they do WL2. If this doesn't deliver, he's basically ruined his reputation, which he needs.
And as to developer support, you're right about the Vita comment - Western developers aren't supporting it. But they are supporting iOS and to a lesser extent Android. I think the idea is that this will be easy enough to support, that developers will figure it's worth their time to do, porting from more traditional Android.
Remember, at one time, before consoles ruled the gaming market (or maybe between it), companies would put games on the C64, Atari 400, Spectrum, PC, and so on. I can't imagine this would be more difficult, since it still basically just is Android, they just need to support the controller, really.
I don't know about this yet. Wouldn't a controller plug-in thingy for your phone accomplish the same thing? Not sure there's a good enough reason for a standalone device.
Well, believe it or not, but not everyone actually owns a smart phone. Sure, you can get an Android tablet, but that costs twice as much, almost literally. The most comparable thing is the Google Nexus 7, which is $199.
Beyond that, I can't imagine it's that convenient constantly plugging your phone into the TV. What if someone calls you? And wouldn't you have to constantly charge it? And how much would a controller cost? Doesn't a 360 controller go for about $50 stand alone? Really depends on the build quality of the controller in this, but good controllers aren't cheap.