I'm very late to the party here, but I just wanted to add a few things for this review for anyone who happens to be curious about trying this in 2017. I haven't seen any updates on this topic on this site since this review. (Or maybe I'm just terrible at searching...)
- It is possible to connect the Steam controller to the Steam Link without using the dongle. I currently have four Steam controllers connected simultaneously to my Steam Link without any issues.
- Updating the firmware for controllers works over a wireless connection.
- You can use a wireless mouse and keyboard with the Steam Link, I've only had to plug the usb dongle into the Steam Link and it worked instantly.
- As for the button configuration, there are now some generic controller schemes that you can try for games where the developer hasn't made a Steam Controller layout (or you can browse configurations made by the community). If none of those presets are to your liking you can open the overlay and edit any of the controller configurations while being in game and apply the changes immediately (no need to leave your sofa!).
- The picture dropping out that was mentioned as the biggest problem hasn't ever happened for me, and I've been using the Steam Link for all of my couch co-op gaming the last 14 months
I usually had my TV connected directly to my PC with a 20 metre long HDMI cable, for whenever I had friends over to play some couch co-op. At that time we were using four wireless Xbox 360 controllers. But last year I went over to using the Steam Link with four Steam controllers instead and I must say I've been happy with it, it has worked better than I expected. I have only tried it with the Steam Link connected with an Ethernet cable though, never via wifi. None of my friends did ever notice that the games are streaming instead of being played on a fourth PC monitor. For just playing local co-op games with controllers on a 60 Hz TV the added delay for streaming is not an issue, which was the thing I was most worried about before trying it.