When you buy a microwave, you are buying it to heat food. You are not expecting to be able to browse the web on it or play games. If you are, then you need your head examined or to invent this new product (if you are right that it's a reasonable/desirable expectation, there should be a market for it). I think the distinction is actually very very clear, continuum or not.
Once the microwave starts allowing for remote control and twittering its status, the line does become more blurred ;)
iPod classic, it's not going to hurt anyone if you screw with the firmware, you should be free to tinker to your heart's content. There are also enough obvious deficiencies (lack of support for a variety of codecs) which can be improved.
Same with a TV, the Kindle, the Drobo.