less heat, possibly passive (less noise), smaller case
could an external psu (>350w) be passive?
The amount of heat would be the same. The only difference is that the heat would be dissapated directly into the air, instead of into the case. However, I doubt that the PSU is a significant cause of heat in the case, as most have their own exhaust fan, so this point is really a non issue.
How much smaller of a case do you want? Are the Shuttle and their like SFF computers not small enough? Even if they are not, you aren't going to get components that much smaller for the PSU size to matter. If you really want components smaller than what you get in a SFF system, get a laptop.
I agree that most people do not want yet another "box" outside the "box" that is their computer. I have enough crap already, and I just have a DSL modem and a router. I am too lazy and unskilled to easily, elegantly modify my case to incorporate these items. I certainly don't want a PSU with all the extension cables (or however you get the power from the PSU to the components) snaking around my desktop. IMO, the simple reason that this won't happen is that current PSU technology is an efficient solution. There is no need, and I daresay no real desire, to have an external PSU.
\Dan