I have made some progress.
I read through the entire article posted above and it is great although I played around with mpd I struggled to get it to play wma streams (all bbc streams are wma). So I went with xmms2 instead. This was a doddle to set up. got it working a treat skipping around playlist starting stopping etc.
I have ordered a usb sound card
it was £2 and supports linux. The volume buttons etc can be remapped using lirc too so I will wire these up to buttons for play/stop prev/next which should be pretty easy (done all this before on media centre projects)
I have also ordered one these lcd's
My plan is to get this working with LCDproc or similar project and get it to display the current playing stream. If I can get it working I have uses for it in other projects too like displaying current IP for ssh. It Would be cool if I had a 5th button that when pressed displays the current IP or when two of the current buttons are pressed together.
All I need now is a cheap pair of speakers. Eventually when I get a model A I will probably substitute it in.
I also need a real cut down distro maybe DSL or something. No sense in having loads of bloat for a headless internet radio.
I will probably put a web front end on xmms2 too to edit playlists etc. But there are also mobile apps for this.