Geez, there are gobs of good receivers and DVD players at nearly all price points. Just remember, the speakers and room are what make or break any system sound-wise so put the most of your sound budget there. Besides Axiom also look at Paradigm and PSB (both fine Canadian makes) for speakers.
Not into HT myself so I'll leave the video suggestions to others.
However, a 28' long room (about 9 meters?) ain't too shabby! Were you talking about a rear-projection LCD? If I had that much projection space for an HT I'd be looking at if I could swing a front-projection system -- if not now, then maybe in the future. Maybe a used projector would fit the budget? Also, I understand that while there are very expensive screens out there, one needn't go top dollar for a good one. And again, maybe there's a second-hand market. What do you video mavens think?
If you meant a front projector, ignore that whole last paragraph!