There are some downsides though:
1) This is a 2 cpu setup, so it's made for server work, not any kind of O/C'ing. BIOS options are slim for that.
well no need for the bios my friend. with lga71 the highest native fsb is 400mhz. with a 50watt tdp 1333fsb cpu hitting 400mhz/1600 should be a walk in the park. un like with i7, lga771 can be pad modded for higher fsb speeds.
2) The reason it's a good cruncher/folder, is it has a large cache built in -
which ensures it's not a real power-miser, although my particular board tried to be just that.
yea the lga771 xeons are l2 monsters compared to i7
3) Since my cpu's are physically very close together, aftermarket cooling options are very limited. Some server boards are designed with their cpu far apart (note to self).
some boards are yea, i found a matx lga771 board i like or was it a dual lga1366. in either case TR does have a lga771 kit for just about any of there coolers. then if you check out sidewinder computers the have HR-01 U3/U4 heatsinks. since i wouldnt be using a case for them either way, i wouldnt have to worry. was going to mount them caseless some some other farms i have seen.
4) Mobo size is quite large - not many cases will handle it.
indeed it could be but there are lots of options for both lga771 and lga133 for mobos. as you can find them in atx/eatx/matx,etc.
5) Cpu and RAM cost are doubled.
yea cpus are a touch more but for rosie imo worth it for the rac the produce. plus its one system with 8 threads running vs 2 machines using even more power for the same work.
6) Mobo has a lot more traces, increasing it's cost.
well for dual lga1366 server boards you would be suprised. i was on newegg and found one for around $250 and i paid just about $260 for my gene board. giving a small extra cost factor on cpu side for twice as many threads. lga771 boards i that i have gandered at, well ones that only do 1333fsb. are not that much more costly then lga775 boards.
The way I look at it is my i7 does 4/5'ths or so, of the work of my dual quad server, and the price of all i7's will be falling quickly as soon as the next generation of cpu leapfrogs over it. It does this while running at 2.93 GHz.
well that is true but i7 cpu speed needs to be much higher. i mean you have two cpus at 2.5ghz owning a [email protected]. if that isnt impressive then i dont know what else to say...
The prices of Xeon's won't be falling nearly as much.
that is so true but sometimes you can find killer deals on them on eflay.
If I had it to do over right now, I'd probably aim for eventually having two i7 systems, (920 or 940), and 2 to 4 graphics cards, total. You'll never race past ChasR or Pixie with that, but you will be able to add a lot of folding power to whatever project you decide to contribute your resources toward, and do any other type of computer work or play, that you want to.
ya that is true but i can try to pass them in the rosie team!! 
