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I think this is overkill. Recent AMD CPUs have integrated GPUs that are probably more than enough for video playback and recording. I would start with that and consider adding a discrete GPU only if the need arose.
The RX 550 is straight-up the lowest requirement for an HTPC as it will decode h.264 and h.265, which is the bare minimum requirement for that use case, so it's a 'Stick this in an old desktop you have laying around and there's your HTPC' kinda deal.
Recent AMD CPUs have integrated RDNA2 GPUs, with h.264 and h.265 decode/encode support. This has been the case for years. Buying an RX 550 for that purpose when the CPU already does it would be a waste of money, space, and electricity, and generate unnecessary heat and (eventually) e-waste.
If OP already has a spare CPU without that support built-in, then your suggestion might make sense, but I don't see any indication of that being the case.