Have you considered using a projector? Infocus sells DLP orojectors for as little as
$999, and a screen can run from free to >$1000 (Cheapest DIY to expensive Commercial).
For speakers (at least the fronts) I would recommend Magnepans. The
MMG's are only $550 a pair and are wonderfull, I personally own these and they are fantastic for the price and as a conversation piece

, I plan on upgrading to the
MG1.6QR's, they are only ~$1500. However they do require alot of room, about 3' behind them (2' minimum). I tried to place mine against the wall as a "low footprint" solution and thye literally sounded like $7 computer speakers because of all the dipole cancelation

. I was thinking about getting Martin Logans, but after listening to them and having Maggies, I feel the $1500 1.6QR's are probably the best hi end value in HiFi audio period. Magnepan also offers smaller MMG variants starting at $300, however be aware that the MMG's put out about as much bass as a good 6.5" woofer, so decreaseing the surface area will definantly require a external sub.