I've used an older model C1 (the C1VR/BP) before. Currently I own a Vaio TR series laptop alongside my Z.
The keyboard on these units are definitely very usable - full-size keys and fairly decent key response. Definitely a plus.
The screen - my unit had a 1024x480 screen, which didn't work so well with some applications that expect everybody to have at least 800x600 by now (stuff poking through the bottom of the screen and whatnot). The model you're looking at probably has a 1280x600 screen at least though so that probably doesn't matter. (My TR has a 1280x768 screen, which works well with every application I throw at it).
The CPU - the Crusoe certainly is painfully slow clock-for-clock slow compared to the Pentium 3, but it supports the full x86 instruction set and is still faster than a 400mhz ARM CPU. You'll definitely be able to do a lot more with it, especially video playback and whatnot.
Being able to run desktop operating systems and applications without any recompiling or repackaging is a definite plus.
Do the VIVO features of the C1MHP require a special dongle? And if it does, is that included? I never did get to use the TV or VGA out on my C1 because of the availability of such parts here in Canada. Then again, you're in teh nihon so it should be easy enough to source.
Actually, here's what I'd do. I'd buy the C1 and try it out for a while to see if I like it. Then if it really turns out to be a disaster you can sell it on eBay. Since the C1 series laptops are so rare in North America, they fetch a pretty penny there - my 600mhz Crusoe / 128MB / 10GB sold overnight at my Buy It Now $599 price when I listed it not too long ago.