OP: So, I've had a little time and here's some options for you:
For the subs: Right now the
Rythmik LV12R sub is on sale for $569, normally it's over $700 I believe so it's a darn good deal. This was one of the over $700 subs that I was going to recommend anyways. It's flat down to 17Hz so you get that low end extension and rear ported so you'll get a little more more output than a sealed box. An extra feature is that it's servo controlled, though it doesn't make a huge difference, it does make the lower end..."cleaner". I have no idea how long the sale is for though, but I think for you're budget and the size of your space, at this sale price this is the sub to consider. (Though Rythmik is a separate company, I'd suggest getting them through Ascend)
I suppose in keeping with the higher budget subs there is also the
SVS PB-2000 at $800. This sub again is flat to 17Hz but isn't servo controlled. However, it should have a little bit more output than the Rythmik, which is something to consider given your room size. Also, down further I'll be mentioning SVS speakers so you can usually get a discount when purchased together. This discount is why I'm mentioning it otherwise I'd take the next sub over it.
The best value sub under $1000 and can be argued that it is the best sub under $1000 (minus sales and clearance) is the
HSU VTF-3 MK5 HP at $800. If the Rythmik wasn't on sale, this is the sub I'd recommend easily. This sub has variable tuning, so you can emphasize low end extension or slightly less low end but with a higher top output. Either way this is a beast for under $1000 and even though it's only flat to 18Hz when low end is picked, it'll have more usable output under 17Hz than the other subs.
A little down in price is the
Outlaw Ultra-X12 at $639. This is a new sub so I'm not familiar with it. But it's another variable sub that can be flat to 17Hz or to 25Hz with more output. My first guess that it'll be comparable to the Rythmik. If you want to keep the costs down a little and the Rythmik goes back to full price, this should be a good choice.
The above subs are more appropriate for the size of your room and still leaves room for 5 speakers. At normal levels they will do good but if you have it turned up a bit, during loud sequences you may find it lacking a little bit...or not. Unless you're really looking for that bottom end, I give them a decent chance at being enough for you and if not you can always get another later.
Next down the line is the
SVS PB-1000 at $500. Again, depending on your preference, it might be enough for you. However should you get this, I would be going into it with the idea that most likely you'll get an additional one in the future as it is well within the underpowered region for the size of your room.
I'll also throw in the
HSU VTF-2 MK2 at $530. Probably won't be much different than the PB-1000 though again it's variable like the above Hsu. I figured I'd give you a different style if that matters any.
Now, if you don't care about being flat down into the 20's Hz or lower (or for sure you don't want it), there's the
HSU STF-2 current on sale at $330, regular price $360. This is the best buy under $500 and also one of the best. It's flat to 25Hz though at higher volumes the fall off will move up towards 30Hz. It's even more underpowered for the room than the previous two but at $330, I'd suggest getting two from the start. I'm pretty sure if you call them up they'll give a little discount for getting two at the same time. With two, you also have the ability to really start smoothing out the bass response throughout the room also.
These are the subs you should be looking at for sure, though you aren't limited to them. You may come across others on sale or clearance and may be a great deal so ask about them.
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Speakers, right now I'm going with five and think you should go that route and if you want 7, get the rears later.
Again I'm going to start up at the top and say
Ascend Acoustics. Specifically the CMT-340 SE's for the fronts and the CBM-170 SE's for the surrounds. The 340's are $570/pr and you can order a single one for the center though I don't know the actual cost of it, there is a 340 center for $300 though. Ideally you'll want another vertical speaker for the center but I don't know the amount of space you have available for it, my guess the "center" speaker only has cosmetic changes so a vertical speaker will cost the same at $300.
The 170's are $300/pr so for 5 speakers at most it's $1170 though there is a discount for package deals, currently you can get them for $1065. Also, if you go with the Rythmik sub, you'll get an extra 5% off the sub when purchased with speakers.
So, with the Ascend's you get a very good, neutral speaker though they won't win any awards for beauty. It's not going to really favor particular type of sound, nor is it going to favor certain frequencies as it's pretty flat. The 340's are slightly more efficient than a lot of other speakers in this price range so it doesn't require quite as much power for the same spl (sound pressure level...loudness if you will).
Next up is the
Hsu HB-1 MK2 at $160 each or $190 for a very nice Rosenut veneer. Here you'd have 5 of them, or if you need less height for the center, there's the HC-1 MK2 for $250 or $290 for the Rosenut. This is a horn-loaded design, that is fairly neutral and are even more efficient than the Ascends.
As you'd expect, you get a discount when purchasing multiple speakers and also if you get a Hsu sub. To see just the speaker package deals, look under the speaker pulldown. Also with these, you'll have to contact them if you want another bookshelf as a center to see what the price is for a package system.
Then you have the
SVS Prime series. Specifically using the bookshelves at $250 each for the front three and the Satellites at $135 each for the surrounds. This comes to $1020 for the 5 though you should be able to have that discounted and you'll receive a discount on the SVS subs if you get a package deal.
These speaker are less efficient than the above, however they have been getting really good reviews for their quality. I'm not quite sure how these speakers sound, though I think most reviews point towards neutral, maybe a little emphasis on the top end.
To go in a slightly different direction, I'll point out the
HTD Level 3 Bookshelves. They are list at $319/pair or $349/pair for a gorgeous Macassar Ebony veneer and they use a ribbon tweeter. Ribbons tend to give a different texture to sound than dome tweeters. Hard to explain, if you look around you'll see adjectives such as; light, transient, airy, responsive, and a few others all of which don't necessary mean that much. Again, I recommend the bookshelves for the center also, so you'll have to call to get a price for a single speakers and you should be able to get a discount on a set of five. Otherwise they have a center speaker for $209, $239 for the Macassar.
I myself prefer ribbon (and planar) tweeters. My background is classical and I think these drivers tend to capture some of the more intangible essence of instruments being played. These speakers are of average efficiency, though with the ribbon tweeter you might not have as high a top end for spl that you can get with the dome tweeters above. Overall these are a good speaker and are well reviewed. I'd probably say that if you are mostly going to use this as HT, perhaps you should leave this one off the list. Aesthetically though, these speakers in the Macassar are the best looking speakers on the list...if that matters at all (with the rosenut HSU right behind it).
Last one I'll mention is the
EMPtek R5Bi bookshelves at $225/pr. They do have a couple of centers also, but again another bookshelf is ideal. EMPtek is rather highly recommended on various forums, especially their towers. They do have a bit more emphasis in the mid range than other speakers and these are the least efficient speakers of the bunch. Depending on how far your listening area is from the main speakers, you may want to skip these.
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These are all solid suggestions, my pick for you would be the Ascend package with the Hsu VTF-3 sub though it's the most expensive at $1800. Probably a better value for you would be the Ascend/Rythmik package which will be around the $1600 which is fairly close to the $1500 target. I think the extra $200 would be worth it, however it's a slippy slope when you start adding alittle bit here and there to the budget for upgrades.
If you really want to get the most out of your budget (+ alittle bit more) I think the above is the way to go. Working more within your budget and probably getting the most bang for your buck, the HSU Hybrid 3 HP 5.1 package set is hard to beat. It gives you the VTF-3 sub with the Hsu bookshelves for $1500. You can even go with the 5 Hsu's with the Rythmik for around $1350.
I should mention that prices for all the things I mentioned do not include shipping. Some items will ship for free, others it depends on where you live. I'd suggest that whatever you go with that you contact the vendors and talk with them and discuss what you're looking at. They may offer better deals than listed, or give you other options that I haven't listed. All of the above are known to have good customer service. Also, all of them offer some kind of home trial, I'd suggest reading the specifics with each vendor, some will refund everything minus shipping, a couple I believe will even cover the shipping.
If you happen to come across other things, or if you have any questions please feel free to ask. I've just barely touched on what's out there, but picked some of the best in your budget. Sales, clearance, or B-stock items can easily change things around.