I disagree that "fastfastfast" storage is required for video editing. Virtually any of the 7200 RPM HDs available today are more than capable of handling just about any video capturing or editing task without any serious issues, although I would use a dedicated drive and not the system drive. Certainly, there's no need to go with any kind of RAID setup.
IMHO, disk size is way more important, as video files can be friggin' huge. You'll fill a 120GB drive with only about 9 hours of DV footage from your camcorder. If you're dealing with uncompressed or lossless compressed video files, it's even worse.
Storage issues aside, you're gonna want the fastest processor that you can afford (your P4 3.4Ghz choice is good, since that's the fastest available, plus it supports HT). While video editing itself doesn't need all that much CPU power (my 2.0 Ghz P4 with 512MB PC2100 memory on 100/400Mhz bus can handle editing with no problem), video encoding will bring a system to it's knees. For example, I recently encoded a 24 minute DV file to high-quality MPEG2 (for DVD creation) and it took more than 5 hours!
1GB memory should be adequate -- I don't think more will help very much, but I haven't heard of any benchmarking that anyone's done in this regard.
Hope this helps. Good luck with the rig.