You have two options,
Like Zumbo wisely stated, if you are planning on upgrading speakers at a later date or want really good sound, spend the $500 on 2 good front bookshelves. Next, add the center, then a sub and then the rears or two new better fronts and move the 1st pair to the rear. This is my suggestion.
or,
If you really don't plan on upgrading and can settle for "decent" sound, I would scratch the H/K off the list and get te best possible speakers you can. Listen to the Athena and Polks and see which ones you like the best. I would also look at some packages from Energy, Paradigm, and maybe even Definitive Technology. You might spend a little bit more but you will get much better sound.
Shinerman