original poster here, checking back in.
thanks everyone for all your extremely helpful insight!
who knew i could glean this much information from a simple question (okay, the question wasn't that simple, but my point remains).
after reading everything and processing it more, here's where i'm at regarding priority and purchasing plan:
1) get 2 Axiom M2's for L&R, unplug my current onkyo center speaker and set my receiver to 4 speakers and sub
2) when cashflow resumes, purchase a 3rd M2 for the center channel (there just seems to be too many of you recommending this course of action for me to ignore, not to mention the $100 in savings over buying a center channel vp100... never would have thought about this before, so thanks guys)
3) save for a new sub (also a new strategy i'm implementing thanks to this thread)
4) get a new receiver to take advantage of HDMI in/out for bluray viewing via PS3
5) replace surround rear speakers
brilliant.
i like this plan... i do have to talk to my wife about the prospect of putting 3 M2's accross the top of our entertainment system. physically i have the space, aesthetically? mmmm...
i'm fascinated by the information regarding the center speaker. i read the article that patrick posted, and its crazy how a horizontal alignment actually works against the sound quality?
one thing i'm wondering (which i didn't see in the article) was if you could take a vertical bookshelf speaker (my 3rd M2) and lay it sideways for the center?
reason being, we have a shelf space for the center speaker, and this would fly aesthetically better than 3 across the top, but would it defeat the "3 matching speakers" concept?
i'll try and upload a picture of my setup so you can see what im saying.
also, if we do have to put the center speaker up top and keep it vertical, it's probably a good 16-18 inches ABOVE the listeners head when it's on top the entertainment center... will this be an issue?? should i try and angle it downward?
also, measured our room: 16' wide by 12' deep.. so it's not large by any means.
here's my current setup