"Well I finally broke down and bought a room kit from Auralex. All I can say is WOW what a difference this has made. Dialogue is much more focused and centered between the speakers. The midrange and high frequencies are less irritating and smoother. Im hearing more of the recordings ambiance instead of the room."
Congratulations! The absorptive room treatment you've added has apparently worked for you. Those are the most important results. It's why we keep writing and reporting on room treatment.
"I used some of the info from the site to find my first reflection point. The mirror trick worked really well. I took care of all the ceiling corners where I had bad echo."
A suggestion for possible replacement of your panels? The first reflection points on the sidewalls ceiling and floor are more important to take care of first than any other area. See articles 2 and 3 of the CEDIA seminars:
http://www.audioholics.com/techtips/roomacoustics/Acoustics101THX.php
http://www.audioholics.com/techtips/roomacoustics/roomacoustictreatments.php
Treating first reflection points is a correct first and most important step. First reflections cannot be treated electronically. See my article with Tom Holman to hear it from the man himself.
http://www.audioholics.com/techtips/specsformats/AudysseyMultEQ.php
Note that the important distinction here is that you are treating first reflections to attenuate reflected sound waves
at the listening position. Nowhere in the two articles above will you read from either John Dahl of THX or Tony Grimani that the corners of a ceiling need to be treated. Again the operative phrase to keep in mind in room tuning is what do the reflected waves do
at the listening position. I'm not saying you don't hear a difference with your absorptive panels in a reflective corner, I'm just saying there are much better places to use the material more effectively, like for the ceiling's first reflections.
"I still need to nail the ceiling and maybe the hallway off the main room. The hallway still has some echo. Anyone have thoughts on that ?"
Answered above. Ceiling yes, hallway, no. Unless that is you want to hear clearly from the hallway.
"I then put 2' x 2' sections around the perimeter starting at the first reflection points. I also nailed the back wall."
Back wall, YES! Around perimeter, much better than nothing, although maybe some of the panels will work better according to the lay-out shown from CEDIA Seminar 3.
"All in all I must say this is the best 100 bucks I have ever spent on audio."
You got that right. Terrific! You do not mention the thickness of the panels which is the most important spec but it sounds like you've achieved the equivalent of the THX X-curve response
at your listening position with the addition of attenuating the nastiest first reflections at the same time. Bet it is sounds great! (The X-curve is flat response to 2KHz followed by a 1.5dB roll-off per octave thereafter. Most Home THX receivers have this capability which is meant to counteract the THX theater response curve left on many DVDs during transfer to the DVD medium.)