Do you need the video card? If it's just a "family" computer that you won't do gaming on, just sell it and use the Core i3's onboard video. Then buy Windows with that money.
Pretty good idea. Problem is I know my little brother will want to do some gaming. I know the 650ti will suffice, but I know I can't really go down much from there...
Is Linux that much of a pain?
The 650ti is good for gaming. I would keep it if you know your little bro is going to be doing anything above something like Minecraft. http://www.anandtech.com/bench/product/781
Linux's major pains are probably the lack of the conventional .exe style installs and lack of major gaming titles. Once you have it setup (which is pretty quick once you get a hold of the terminal), it should work as intended. Something like Elementary OS or Ubuntu should suffice nicely for a family computer.