The Rift is both input and output, though the input is fairly limited to head movements and generally requires supplementary input for gaming.

In any case, I don't think it is what Valve is hinting at, though it is something they have made some moves to support already in the form of TF2 and limited HL2 support.

It does headtracking, so it's both.

Technically you could say head movement is input but I get your point.

That being said it could be a combo, like Rift + a wiimote-style thing?

Mouse + keyboard break Rift immersion, pads are better but still far from perfect.

Considering the vast majority of current Big Picture games use the Xbox360 controller, and that they'll probably already worried about getting enough content working on this device, I highly doubt they will do something so different as a Rift + Wiimote and the like.

My assumption is Rift will be supported, but primary controller will be something extremely 360-like. If not made by Valve than by someone that already makes 3rd party 360 controllers.

The entire idea here is to have a TV-attached device along the lines of the Xbox or Playstation that plays Steam games — so you can sit on the couch with your SO and play some Trine 2 or something. An input device that you strap over your face would make the couch-and-TV integration a bit moot.