I'll let Thom confirm, but my understanding is that the information needed to get past the initial splash screen needs to be downloaded from the core- hence the wireless configuration.
I don't see why you couldn't use a wired pcmcia card (not sure which ones are supported) and boot everything off of that- certainly less portable with the cat 5 tether.
And, to my knowledge, there is no "desktop" in the sense of Kubuntu options menus, web browser, etc other than what is provided on LinuxMCE's orbiter UI1. There was a question posted earlier about getting a web browser on these, but I think it's currently only on the "to-do" list.