first, thanks to those who have positively contributed to this thread. i like to see how the knowledge base is already expanding with new suggestions.
also, i hope anyone who is interested in upgrading their HTIB's in pieces finds useful information here. i used to own an onkyo HTIB (HTS-780) and ultimately found the speakers to be muddy and the sub wasn't so great with handling movie bass.
i took a chance and bought a pair of athena B1's and a C1 on clearance for $200, and loved the immediate improvement that it made to the system. so i sold the onkyo back surrounds, mains, and center as a package via craigslist for $125. bingo, new speakers only cost $75.
then i bought a refurbished H/K AVR-235 receiver from harmandirect on ebay for $260, and sold the onkyo receiver on craigslist for $250, believe it or not. so for $10 more, i got a better receiver with more power, features, etc.
by this time i was hooked, and the sub had to go. i sold it for $110 and bought an SVS PB-10 for $460. so yeah, i went over budget, but ended up getting the SVS for $350 net, knowing i would not have the urge to upgrade soon b/c it is such a capable sub.
finally added some athena S.5's as surrounds that i got off ebay for $70/pr
. sold the last onkyo surrounds for $30.
the best and most dramatic upgrade was the sub, then the L/C/R speakers. if i had it to do over again, i would have built the system in pieces. but the upgrading was fun, and not too cost prohibitive, when selling the HTIB gear is taken into account.