All right, I haven't actually used one yet. But they appear to be well-suited for some installations or kiosks since they are completely self-contained. You wouldn't use the pen as an input device, but they would be good for unusual enclosures using other input devices, where space or cable runs are concerns. This would be particularly good for mobile installations or objects with embedded screens, although the battery life only gives a half-day's worth of use. Some models have built-in wireless networking, which would eliminate another cable run for networked applications, updating or remote access. Some models automatically pivot the screen image when the device is turned. The screens are generally small, however, and there are usually buttons on the front which would make it tricky to encase in a frame.
Alternatives? For something small, try a Windows CE-powered PDA -- there is a Flash player (but no Director player). There are also some small, self-contained PCs. See this page.
Here's the lowdown on individual models:
Acer TravelMate C100
Clamshell with 10.4" screen, 800MHz Intel, built-in WiFi.
Compaq TC1000
Clamshell or slab with 10.4" screen, 1GHz Transmeta, optional WiFi. The screen is reported to be inferior.
Fujitsu ST4000
Slab with 10.4" screen, 800MHz Intel, optional WiFi
Motion M1200
My favorite (without having seen them all): a slab with 12.1" screen, 866MHz Intel and built-in WiFi.
Toshiba Portege 3500
Currently the high end, a clamshell with 12.1" screen, 1.33 GHz Intel, built-in WiFi. My only concern is the durability of a clamshell over a slab in the exhibit environment.