Minecraft runs better with a faster core and it wasn't that much more to step to that processor over one of the 1.8Ghz ones. Also the SSD was cheaper than most of the HDDs. If the system is running linux and JUST the minecraft server. Then you will be close, but should be okay on storage. Faster and dual channel RAM would be better.
Minecraft Thrives on Single Threads and a fair bit of RAM you would want as fast as a processor you can get. May be a good idea to look at a single core high RAM VPS you can get them for fairly cheap.
A1: I've run Bukkit and Spigot among other things. I have no particular preference in whether I use them besides it occasionally slowing down time between updating to snapshots and the like.
Q2: Are you running any Mods/Plugins?
A2: I don't typically run mods or plugins as I run private whitelisted server. The only plugins I've used in the past have been to allow for easy administration over web consoles.
Although certainly a viable and cheaper option. The problem with rack servers in home use is size (not so much), noise and power.
Unless your using a fairly new one (which would cost) they can be fairly loud even at low loads. Also power consumption. Again unless you are buying a fairly new one, they can idle at quite a high power draw.
It is definitely an option to people though if they have a corner somewhere to tuck it in.
Although this thread is old. I update my recommendations to use the new AMD AM1 (Use the fastest Athlon for best performance) platform for low power and low cost