7.2 for 1k sounds tough. If you stick with 7.1 you have some doable diy options. If you don't mind huge, stentorians with an f20 would be in your budget not including a receiver. That would get you basically no distortion at high levels. If you want "high end" you will need to spend more on the speakers. If you don't have the space, you can build half decent bookshelves and an 18" dayton HO or cheaper with a lilmike t-6 (if you don't mind sacrificing the lower 20's hz).
I guess the question is how much space can the speakers take up and how ugly can they be? Luckily my gf doesn't care about space and ugly, as long as they sound bada**