templemanners:
Agree with many of your points:
1. Will look into a more inexpensive receiver. I'm leaning towards a deal on the Marantz SR5005, which I can get for $599. It may still be slightly overkill, but it is a good brand and may serve for future upgrades.
That Marantz seems like a good choice for your budget.
2. That said, I'm budgeting up to $1500 for speakers. Given my space constraints, I do think I can get bookshelf speakers and place them on top of the entertainment console, instead of wall mounting more thin-ish pairs. Follow up "newbie" question - is the difference that significant between a bookshelf-type NHT vs. a seemingly larger on-wall EMP / Paradigm? If the difference is significant then obviously bookshelf is the way to go.
Do you have any pictures or links to what your entertainment console looks like? You said "on top" which leads me to believe that the console is pretty tall. Would you happen to know roughly how high the space the bookshelf would be sitting on? Using the NHT Absolute Zero as an example, I would take the height of where the speaker would be sitting and add 7-8" for the tweeter height - the Zeros are 9.75" according to the website, so eyeballing it, I'd guess the tweeter is up 7 to 8 inches from the base on the speaker.
What you are looking for is the tweeter height to be pretty close to your ear height when you are sitting down. In my place, that is around 37-38".
I don't have a good technical answer to the 2nd part of your question, but my opinion is that on wall speakers are more of an aesthetic compromise than I'd be willing to make if I could at all avoid it.
3. Point taken on the sub. I will purchase it separately. Have heard good things about SVT. Any other recommendations on a max-$600 budget?
4. Regarding insulation/isolation and "open space", I'll try to attach a picture of the layout of the apartment on a separate thread, I would definitely appreciate more precise opinions then. Regarding floor-to-floor isolation, I would classify it as very well insulated.
On #3, do you mean SVS? Max $600 I would assume includes shipping, so I think your only choice from SVS is the PB10-NSD at $499. The SB12-NSD is $599, so it'll obviously cost more than that to ship to you. I'd be wary that a 10" sub would give you the performance you want.
Judging from your floor plan attachment (BTW, my small apartment and I are officially jealous

), you have a pretty big space to fill, even more so if that wall between the kitchen and dining room is not filled in.
Since you have a big space and like action movies, I would look for something ported. The HSU VTF-2 MK3 would be $608 over once shipping costs are factored in (I'm assuming you're in the continental US). The Rythmik FV12 would be just over $600 dollars as well; to ship to my state on the West Coast, I totaled out to $620. I have not heard any reviews on the FV12 though...
Elemental Designs might also have something in your price range. Epik has the Legend that would fit under your $600 threshold (I would pay $581 shipped according to their website). However, I would again say I have concerns that price range ($600) of sub will really do the job.
I'll assume a DIY isn't an option - if it is, I'm sure there's someone who can help you with some design tips if you are interested.
Buying used might also be an option, with the obvious 2nd hand risk...
For the insulation, let's assume for now that you'll be ok with the neighbors. You might still want to look at some sort of isolation pad after the fact if you find that whatever sub you purchase causes nearby objects to shake too hard. I'd wait and see on that though...
5. I'd prefer to get the system in one swoop so as to enjoy it from day 1. My preference would be to keep within the $1500 speaker budget including sub, and purchase all simultaneously.
Duly noted. My only suggestion would be to make exactly sure you know what you want will work before you buy. Sort of like an audio version of "measure twice, cut once".
Now one question for you - since you'll be set up in that little alcove, would you be interested in forgoing the surrounds and having what amounts to a 3.1 setup (L/C/R with a sub)? Since you'll have the couch right up against that wall and that door to the bedroom area so close to the couch, the surrounds would appear to be blasting you right in the ear.