Well, a home theater system can be made as musicale as you want it to be.
Here is my advice; if you like Denon, try to buy online - it will be cheaper. Stay under your budget on the receiver, then you can spend more on speakers.
If you are going with the full 5.1 system, go cheep on the surround speakers, as they are important enough for movies, but add nothing for two channel music.
Larger, high quality, high sensitivity bookshelf speakers with a musical subwoofer (or two) should give you better results then tower speakers of the same price.
And lastly, get some room treatments; the way you described your room it sounds like it’s very “live”, you may not need much to fix it, perhaps just some thick curtains or some rugs.
As for speakers, you will have to audition some to find what you like, but here are some to look for:
JM Lab-Focal
KEF
PSB
NHT
Monitor Audio
Infinity
Mordaunt Short
....just to name a few.