wmax, please be my guest and elaborate....
Put primary effort into acquisition of the most neutral speakers you can afford in the budget. People like to often tell you to go listen, but this has no gain as compared to my suggestion, when the speakers in question are standard monpolar radiation pattern with other standard features, and credible 3rd party analysis can verify measured performance of sufficient data points. In fact, following my method, you can end up with something that better fits your preference, since you get to have direct control over this variable. The primary thing differing between most speakers is the frequency response. Usually, you are merely picking speakers based on this primary aspect. There are other, extremely important considerations, but not many speakers actually have substantial advantages over one another in these areas. Two such very important, but rarely exploited areas of meaningful improvement are: (1) low resonance cabinets (2) off axis response closely resembling off axis response.
The best speakers of which I am aware, overall, for a budget oriented system, are the Ascend Seirra 1 and B&W 705, with the 705 having superior over-all linearity. Both have somewhat lower resonance cabinets than most other speakers in their class. The 705 would be the ideal here, but it does cost 2x more than the Sierra, which compromises somewhat in overall linearity. But both are linear enough to be used successfully when paired with a loudspeaker management system. If further savings are needed, one can inject a little elbow grease, and purchase a speaker with superb linearity such as the Ascend CBM-170(on par with the B&W 705 in this regard) that sells for a very low price($350/pair). The problem here is the cabinet is highly resonant, just like most speaker systems. Cabinet resonance causes a coloration on all sounds played through the speaker - thus is a form of distortion. You can, if you are up to some work, you can modify the internals of such a speaker as the CBM-170, and end up with a highly linear speaker with very low resonance cabinet for very low cost. I can elaborate if requested to do so.
A high precision loudspeaker management system allows for one to control with high precision, the frequency response(
one of the main differentiators among common speakers), using various filter functions. The management system also allows for custom, variable crossover types/rates/points in order to ideally integrate sub woofers seamlessly, but ideally, you need to use stereo subwoofers as opposed to mono, due to the ideal 1/2 wavelength or closer distance related to crossover frequency, required for optimal integration of two sound sources. The Behringer DCX2496 is the lowest priced management system suitable for hi-fidelity purposes(
no noise, distortion or other artifacts when used properly).
In order to use a loudspeaker management system as suggested above, you need to have a way to insert it between the pre-amp and amplifier stages. Most recievers have no such facility. However, you can use many recievers as fine qualty pre-amps and feed outboard amplifiers, inserting the management system between these two points. You can also opt to purchase seperate surround pre-amp/selector unit such as Emotiva offers. However, many recievers have fine quality pre-amp sections, and offer superior HDMI abilities(
conversion between video connections, upscaling, etc.).
-Chris
