Something you may wish to check out: This month's "Stereophile" had a rave review by Sam Tellig of Mordaunt-Short Carnival 2 bookshelf speakers that sell for $250. I have no idea where you would go to audition these, but it does indicate that you can get some very good sound within your budget.
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HT:
990/770
Oppo BD83SE
Pioneer Elite DV-47A
Magnavox HDMR513h DVR/DVD-R
Sony DVD megachangers-2
Sony CD megachangers-2
Monster power centers-2
Sony 48" rear projection SDTV
Roku video player
JVC AL-A158 Turntable
Polk RT-2000s,CS-650,XS-650s,RT80s
LFM-1EX
Hsu VTF-1
12" Velodyne

Family room:
OPPO 970
Sony 32" direct view HDTV
Denon 3801
Rolk RMs