I use both the remote control and kb/mouse but for different purposes.
When I'm in the Media Centre interface it's all remote control, when I drop out of the interface into windows - it has to be a keyboard and mouse (like any other windows OS) because the remote won't operate there (although the mouse will operate within MC but the menu is a little different).*
I guess I'd have to say that - yes - you'd lose quite a lot of functionality because of the ease of navigation with the remote - frankly I wouldn't even try to run my TV and home theatre using the mouse and keyboard.* Having said that, if you're using it as a desktop PC with Media Centre functionaility (as many do), the mouse and keyboard are fine because you'd be right next to the system instead of 6 - 10 feet away..
As for where'd-ya-get-it? - Umart in Sydney sell the following:
Media Center 2005 OEM (must buy minimum one peice of hardware) for $198
Media Center OEM including Remote Control System as seen
here for $233.00
Remote Control System (standalone) for $60.50
they're all on
this page
Clearly, if you want the windows remote system it's a lot cheaper to buy it as a bundle with the OS - but I'd stay away from the bundle which includes a TV Tuner since Umart don't provide any details about it.