All:

Thank you for the great replies. Bob Becker in particular THANKS for the great reference to the Gonk College of Home Theater and Audio, which I'm including again here to simply reinforce its value.

http://prillaman.net/ht_dvd_index.html

Also thanks for all the suggestions KOYAAN and TMH, and Xenon/AvMan for the tips. Clearly I need to do some Gonk studying to evaluate them all. But given a small (relatively) budget (prob under $1k) I think most likely I'm going to invest in an amp and speakers, ultimately ending up with:

HTPC > amp > speakers

...which given what I've been suffering with, will be a huge step up I hope? we'll see.....