Apple is already in the monitor/TV business with its georgous iMacs. This move would make a lot of sense for Apple and be another unexpected booming product line.
It's also the end of the chain in a sense that they control the content (movies, apps, tv shows) on the TV via iTunes distribution and payment system, they control the hardware that you consume this content on. A real Apple TV is Apple's attempt to own the hardare in your living room. They already own it while you're there anyway with the iPhone and iPad.
Before Apple gets into TV business, I'd like to see them build out the new Apple TV and create a TV App Store just like Yahoo Connected TV, Google TV and Samsung TV.