With that setup, you will never be satisfied with DVDs, period. Give up. Life will be easier, at least it was for me, none since '07. edit: please note that BD has over 600% of the pixels of DVD, and NO THERE IS NOTHING YOU CAN EVER DO TO GET THOSE BACK, except for an algorithm's guessing at what those roughly 1,700,000 missing pixels might be, and that's at many/double digit times per second.
With that potential budget, and now knowing what your rig consists of, you want to upgrade your display. Of course as with audio, it's the same with video in that setting the room up itself will lead to the highest value.
But even if you kept your room as is, and your display as is, with that budget, an outboard VP will be waaaaaaay more beneficial than a simple bluray player, in terms of video.