SteveO - I'm in somewhat the same situation, trying to put something together for not too many bucks. Except in my case its from having too many college kids. You guys are spendy little buggers.
You might look at DMC Electronics. They've got cosmetic blems of a little PSB 5.1 system for about $650. The system includes Intro LR1s for front mains and surrounds, plus a matching center and small sub: Its the "mini theater system" shown own the PSB speakers site. (Sorry, I don't have enough posts to be able to include the link). I spent about 15 minutes listening to the LR1 just a couple of days ago. Two of them were filling a 25 x 15 room x 12 room without sounding strained (with easy source material - female vocals). They seemed quite neutral - perhaps just the slightest bit warm to my ears - and seemed like the sort I would be able to listen to all day. There is a review of this system on the Web somewhere. As I recall, the only downside was the sub bottoming out on some heavy LF theater effects.
Please not I have NOT done business with DMC, so have no idea what their idea of a "cosmetic blem" is. They are an authorized PSB dealer, though.
Throw that PSB system together with a $100 upscaling DVD player (I recently picked up a cheap little Pioneer DV-400V that I'm very pleased with.) Toss in a Yammie 463 or Pioneer 818 for about $250 and you'd have a pretty musical setup that would handle small- to medium-sized-room theater fine, as long as you're not a complete basshead.
Hope you're able to put together something sweet.