In general, I've found that using in-wall speakers for the Surround Back channels (the 6th and 7th speakers at the very back) works quite well, but for the actual Surround channels (on the side walls), I definitely prefer diffuse wall-mounted speakers.
Personally, I subscribe to the THX Ultra2 setup scheme with diffuse speakers directly to either side and monopole speakers placed quite close together at the back. In a properly sized theater with adequate distance between the speakers and listeners, this setup works very, very well IMO and has the added benefit of also working very well for SACD or DVD-Audio 5.1 setup, which intends for the surround speakers to be in the rear corners. The combination of the surround speakers on the sides and the monopole speakers close together at the back does an effective job at creating "phantom" surround speakers in the back corner, when called upon to do so.
If you're in a situation where you cannot use wall-mounted diffuse surround speakers though, one option would be in-wall/on-wall hybrids - although I do not know of any Definitive Technology speakers that are this type of hybrid speaker.
One good option may be to build columns and mount in-wall diffuse surround speakers within the columns. That would bring the face of the speakers away from the wall, but would also protect the speakers from people walking into them (plus columns always look kinda cool in a theater
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