I'm not sure Apple will/would do it, but I think they have the muscle. They aren't competing with CoD, they are competing with Tetris. They want you to buy and play games on your media device, not watch media on your games device. Hugely different market which is ripe for picking.
Apple would probably not build a device they lose money on: that isn't their game. They are a hardware company and they make their money on hardware. This is why I assume they would build something similar to the AppleTV with maybe a bit more juice: rely on the iPad to deliver the CPU juice and the AppleTV (or whatever) to show the content. "Everyone" already has an iDevice, leverage that and jump in.