Installing one in the back of the armrest would be too low and would likely block the vents.

We have a portable DVD player with a swiveling screen sitting on the armrest tied down with an elastic band. It doesn't bother the elbows, allows for very easy access to change the dvd and it's just about the right distance from the back seats. When the kids ride in the 3rd row we place it the same way on the folded down armrest in the 2nd row.

Aside from being a $150 vs a $2k+ solution, it has the advantage of allowing you to choose from the widest selection of displays. Most displays on the market, including the in-headrest ones I've seen so far, have really crappy resolution. Ours is a Panasonic with about double the resolution of the average portable screen and it makes a big difference i.m.o.
Now if only the macbook's screen swiveled, that would be the ultimate back seat entertainment system :)

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2003 BMW Z4
2005 Volvo S60
2008 Audi Q7
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