Well I was pretty bummed that no one responded, but...
I had to get it done as I live 400 miles away and was only at my moms house for 3 days.
The ending result was really amazing considering how little was spent on this project. All in all, I ended up spending about $550 on a receiver, speakers, sub, cables, mounting hardware and a remote.
The biggest problem ended up being center channel and tv placement, but I came to terms with the fact that in order to correctly position the mains and rear surround speakers, I'd have to mount the tv and the center above the gas fireplace. I ended up wiring the whole living room in wall, taking the trim off, drilling through the floorboard and running speaker wire through the crawlspace under the house(easy but time consuming). I ended up using http://www.homedepot.com/h_d1/N-5yc1v/R-202824729/h_d2/ProductDisplay?catalogId=10053&langId=-1&keyword=shelf+brackets&storeId=10051#.UFKRMo2PWSo
to set the mains and rears on(screwed in from the bottom to the speaker) and a steel L bracket for the center. - Sounds ghetto, but actually came out looking very nice for a total of about $35 in mounting hardware for all speakers.
The denon and a samsung blu-ray(with netflix, pandora, network streaming ect) player along with a comcast HD tuner went in the corner to the left of the TV and the subwoofer went in the opposite corner behind and to the right of the couch. All speakers other than the center were mounted 36" from the carpet with tweeters at about 42". The center was installed vertically and angled down at the same center point as all other speakers(I was worried about this one, but it turned out fine).
I added a 120volt outlet above the fireplace along with HDMI and component video outputs to the tv.
Keeping in mind that my mom lives on her own and there is currently not a tech-savvy male in the house my final challenge was to allow her to control this simple setup 1) without 4 remotes 2) without having to call me if she can't figure something out. So...since the 3802 is an old receiver and has no hdmi video switching I'd have to get something that can do several functions at once and do them reliably. For $50 I picked up a logitech harmony 650 and after about 2 hours of programming it I got it to do everything I needed.
It took me a total of 5 minutes to explain the system to her and she caught on. The first words out of her mouth were...WOW.
Keep in mind that she just left a house with a 10k plus home theater system and I managed to build a satisfying setup for the cost of one of my dads surrounds. And I'm in no way saying this is anything close to a "high end" setup, but it is very possible to put together a great sounding budget living room setup for the cost of a piece of junk HTIB.
If anyones interested in pictures I'll gladly post, just don't have any on this computer.