OpenELEC is the Kodi distro of choice for lightweight hardware. Last time I looked they don't support ARM hardware though. There are a couple of Linux distros that can be installed on some Android boxes and then Kodi, Myth or some other media software installed. I am disappointed with the Minix X7 but event they have a new Android box out that has slightly better specs. Until ARM video and audio hardware improves dramatically, let's just say I would rather spend $300 on a low end AMD or Intel HTPC than than $150 on another ARM box.
They exist, I've run a linux build on a few different android boxes. You had to run the Pivos Xios as a Linux XBMC build when it came out, now you can run it android. I'm running Gotham XBMC Linux build on an S82 (same board as a S89/MXIII/M8) right now. They exist, just got to look for them.
You paid too much, I've had probably 10 different Android boxes now. Get a S802 quad core Amlogic chip, The PQ is pretty good, way better than Rockchip devices, like the X7. Only complaint about audio is no HD audio. Can pick them up for under $100 from overseas. Rockchip is hands down way better for emulating NES and stuff like that, but for video AmLogic is best.
Personally, I like my Alpha way better than any Arm box, but I'll take a $100 arm box over any "smart" tv. I have 3 smart Tv's, other than Netflix I don't use the smart features on any of them. It's cheap to add an Android box to every TV. It'll play any file type without stressing your desktop cpu transcoding. Plus any app you are used too on your phone if you can have, just add an air mouse.