I'm working on a new setup for my bedroom. About 350-400sqft with 8' ceilings. Odd shape, lots of angles, but roughly a diamond with TV in one lopped off point and bed in opposite. 22' from TV to headboard.

Due to aesthetics, I'm looking for on wall speakers. But probably just two of them. Maybe a sub, but hopefully not.

Mostly this will be for watching TV (excellent dialog required) and music at fairly low volume. Good explosions aren't important. But if I do watch a movie at night, I need to hear the dialog at low volume.

For the main HT, I use full range floorstanders in stereo direct and bring on matched center/surrounds for TV/movies. No sub. Biased towards music because that's when I can hear the difference.

Anyway, this setup has me confused. Need to stay below $1500 for the whole audio setup. Closer to $1000 would be good.

Do I use a 5.1/7.1 receiver and just configure the wall mounted pair as large speakers?

Or should I be using a stereo receiver? I worry about poor D-A conversion in my other components feeding piss poor stereo into the receiver.

Currently I'm looking at a Onkyo 506 driving a pair of Definitive Mythos-Two speakers. These will be flanking a 42" LCD.

The mythos-2's aren't as nice sounding as my mains, but they visually match well with the flat panel TV and there is no way I'll be allowed floor standers in the bedroom.

Advice or Alternatives are appreciated.

Do I use a 5.1/7.1 receiver and just configure the wall mounted pair as large speakers?

Or should I be using a stereo receiver?
Either will work.

I worry about poor D-A conversion in my other components feeding piss poor stereo into the receiver.
There is no such thing as poor DA conversion anymore. DAC chips as good as anything you have in your system can probably be bought for $1 a pop in bulk these days.

I just heard the PSB Imagine Mini's at the dealer I go to and all I can say is WOW!! Paul Barton has hit a homerun w/this speaker. It's about the size of the old NHT super one and it gives out the sound of a small floorstander. Perfect for a small room like yours. The speaker is $750. Add a Music Hall 15.2 a solid 75wpc and if you get the urge it has a built in MM phono pre amp to add a TT. The Music Hall runs at about $499. For music and movies add a Blu ray.

is that for sure?
Well, you'll get a lot of self-proclaimed audiophiles (not to mention audio salesmen!) who will tell you otherwise, but nobody's ever been able to demonstrate, in a scientifically controlled way, that they can really hear a difference between DACs or CD players (a handful of exotic--and arguably bad--designs excepted).