Speaker options
Ed,
Listen to the paradigm Monitor series which is between the Studios and the lower end models. Also a bookehshelf system with the Studio 20's and a good sub or buying used on audiogon.com might make it more economical.
At B&M stores, look for B&W, Klipsch refrence, and PSB among other brands and bring some demo material that you are familiar with.
Many of the internet direct brands have a good return policy so you can do a 30 day trial in your home. AV123.com just went risk free on their bookshelf speakers so you are out nothing if you send them back. They also have a great deal on a floorstander 5.0 system for about $2k with shipping because they are moving their headquarters. They sould sound comparable and look a lot better than the paradigm studio series.
This would leave you $500-700 for a good sub and $3-500 for the receiver.