Well, for surround sound systems, it is not generally recommended to have the front 3 speakers in the ceiling. While watching the TV straight in front, the dialog will be coming from "out of the sky". You can get away with in-ceiling speakers for the surrounds.
I would guess that they want small bookshelf speakers for the fronts and centre. If that isn't acceptable, then they're beyond help, IMHO. What about a subwoofer? Is that permitted?
I just re-read your post. The TV will be above the fireplace? Ideally, the mains should be on either side of the screen, which means they should be in-wall, or wall-mounted. If there are shelves on either side of the fireplace, they could be used, although they should be tilted towards the listening position.
I personally don't like the idea of TVs mounted above fireplaces. It can lead to a poor viewing angle and creates problems with speaker placement. I recognize that situation seems to be happening, more and more. I still don't like it...
A 20 x 20 room is large, and small speakers will have trouble "filling" it. Plus, being square can be problematic for acoustics.