[mcgsxr]

I bought a JVC EX A1 off of eBay for $235 or so, earlier this year.  DVD, Tuner, and Hybrid Digital Feedback technology onboard... 30wpc at 4ohms, and a great little unit.

That leaves around $750 for speakers.

Horn Shoppe Horns would be a great choice.
There are several Omega products in that price range.
Used speakers, and that really starts to open things up - Totem Rainmakers etc.

Use CAT5e or CAT6 for speaker wire, and you are done.

I kind of agree that most folks spending 1K on stereo would not want the SB3 as a source, but my brother is getting one - he still has his Yamaha rack system (replete with big Cerwin Vega floorstanders...), so it could happen.

So, if that is open, then this sort of thing can work well.

SB3 on existing PC - $350.
Gainclone off eBay - $150-$350 depending on the build.
That still leaves $300-$500 for speakers...

Another great option, would be to DIY some speakers with the CSS/DIY Cable FR125's - decent little 4.5 inch full rangers that do really well in a small, ported cabinet...

Lots of good choices at the lower end of the spectrum these days - geez, my present system is only worth $1350 or so... I run the SB3, a gainclone, and DIY Visaton b200 speakers.  Including the Bolder Cables cabling, I am ahead of the game.

[Folsom]

Hey Destroyer,
You have PARTS for under $500.  I would have to bill myself a couple of thousand dollars to do the assembly (even if I had the time)!

Wait I have an idea! You buy the stuff I will put it togather! Well how about just a T amp for fun   .

[JLM]

Mark,

Please take advantage of the (slight nowadays) exchange rate between U.S. and Canadian dollars.  

I disagree about (or "aboot" as the wonderful folks north and east of me say it) your comment of the Squeeze Box (SB) not being for the $1k crowd.  IMO it's more of a generational thing.  Seems to me that the generation Y and younger are all comfortable with a PC and never far away from one.  Add in the MP3 craze and the use a PC as a single depository for all music makes tons of sense.  I can only imagine a college dorm, frat, or apartment with wireless networks and 20 SB users sharing files from a single PC.

What gainclone are you running these days?