Or a tablet. I find my Mother uses her iPad way more than she ever used any other computer, probably in part because it's so easy to use she's not afraid to "break something".
My parents and in-laws (60's) have all transitioned from windows based PC's to tablets (iPads). So much easier on me from a tech support standpoint. Much easier for them from a usability standpoint. Most of their usage is web, email, and a handful of apps. It's intuitive, and it doesn't break. Unless someone needs a laptop or a desktop, they should be on a tablet.
Well, then sell the Air and get her a Chromebook! $329 for the HP model, and it comes with a lower-res screen (no blurriness) and a very, VERY easy-to-use interface.
$1199 for a Web terminal is just way, way too much.
Sounds like a Chromebook use case or a 'kiosk' mode Linux distro.
I have an ibook G4 running 10.04 fine and sympathise with the initial problem!