Streetdaddy,
yes you need bluetooth for the macmini/itouch connection. iTouch as a remote for playback works BUT getting the music on the server, manipulating the music, iTunes, etc requires a monitor and keyboard. A cheaper version of the same thing would be to buy an old Palm Pilot and get Salling Clicker software.
My solution to this will likely be iTouch for remote (because I can use it elsewhere too), and unplugging the MacMini from the stereo and plugging it in elsewhere to deal with the rest when the need arises (either that or grab one of those great-looking new Appple wireless keyboards and and a DVI/HDMI adaptor and plug it into the TV.