Once again Linux is the "cheap" option. Linux isn't used by people to save the license cost and well I know I have a much greater need for RAM compared to the average computer user. So I would buy a $149 version then have to install Linux on top of that.

Sure, but Linux can also generally run much more efficiently than Windows. I think having Linux on the cheap version could conceivably be both a cut in licensing fees and also a way to make economy hardware specs viable.

I mentioned it above, but there is no license fee for Windows 8.1 with Bing. It's completely free for OEMs to sell on their hardware, they just can't modify the search settings at install time. The user can do whatever they want with the search settings, and it's a full 8.1 install from a technical viewpoint.

Basically, the difference in price between the two SKUs is purely hardware based. So, buy whichever hardware you need, and install GNU/Linux.

On a side note, I have an HP Stream 7 tablet with an Atom CPU and 1GB RAM, and it runs 8.1 very well. I'd imagine even the lower spec SKU of the Intel stick would run it fine. Storage space would be the only real issue for that OS.

I wonder how big the gap is now. It would be interesting to see some benchmarks comparing Windows 8.1 with Bing (where the 32-bit version runs in 1GB) with an equivalent full-spec Linux.

That's a good point, the recent push by Microsoft towards mobile devices has undoubtedly led to significant improvements. Without some hard data I am certainly being speculative, just speaking from experience.

More than enough to run XBMC (multimedia) or File server (own cloud, bittorrent sync, etc...).