You don't really have to spend gobs of money. Some cheap corner wedges along all four corners will really knock out a lot. Even with digital room correction ( in my experience) it only sounds right where you placed the mic, some parts of the room sounds very weird in comparison to if you'd have left it alone. Only thing it's really good for is getting perfect phase out of all of your speakers, and that can be done by measuring distance and correcting for it in most receivers.
http://www.thefoamfactory.com/acousticfoam/bassbroad.html
An 8 pack of these will really make a huge difference.
Another problem is the fact you have a sunken living room with an open wall. I can't see the exact setup of it but if it's anything like what i've had to mess around in before, there are going to be bad spots where there is what i like to call a "bass vacuum". Assuming the listening spot is in that bad area, the DSP could compensate for it, but like i said, everywhere else will sound bad. You could also goof around with sub placement. In this kind of case you really need a sub handling the low frequencies because you can't just mess around with L/R placement like you can a sub. It would need to be crossed over too, possibly even as high as 150hz depending on what frequencies are effected by the room. You might find having it fire from the open side will solve a lot of issues. Multiple subs (with appropriate phase and volume correction) might help too, and in that case the DSP might do a good job of evening their differences out. Do you have a 2 channel receiver?
