You should seriously consider buying a used DLP XGA projector. Used because you will never be able to fit a good new one into your budget. If you get a projector instead of an RPTV, you will get a far larger picture that looks a lot better than any RPTV ever will. The catch is: you need a dark room. If you don't have one, by all means go with an HD RPTV from Toshiba, Mitsubishi or others.
Make sure you get a receiver that supports DD EX and DTS-ES in addition to DD and DTS. This will allow you to use rear center speakers. Good brands are Denon, Onkyo, Marantz, Outlaw and others.
Paradigm, PSB and Klipsch make some of the best speakers out there. However, the speakers Muadib mentioned don't fit into your budget. Remember that you'll also need two more speakers, for the rear centers. Take a look at Paradigm Monitor and PSB Image series.
I wouldn't dare recommend anything other than an SVS subwoofer to complete your system. the VTF-2 is a great piece of equipment, but from what i've heard, it doesn't compare to SVS.
Before you spend a penny, i strongly suggest that you verify that you are making the right decision with the pros over at
AVSForum.