Hmm.
If you are working with a set budjet, I would go with a Denon AVR1803(6.1 DTS-ES, Multi-room Multi-zone).
A nice dvd player would be the Denon DVD900/1600, or thier multi-disc progressive(cant remember the model). All of these have faruja progressive scan.
For surround, I would recommend a nice set of Mirage.
They have a nice balanced song, and thier newer models have some of the best dispersion ever in a speaker line. The Omni60B\'s in the front(nice highs with bass that hits in the low 60\'s), a OmniC center(same as the omni 60\'s but with but mid-bass woofers), and a pair of omnisats in the rear. Awesome setup. Nice thing is with that setup, you can have people over watching from different seating positions and they still get a good overall surround effect.Top it off with either the LF100/150 sub(depending on room size)
That whole package would run around 2300 for the whole setup.
That would be a system most normal people would hear and envy.