Denon is a reasonable reciever. You can probably do better than buying from EE through amazon, by directly calling and speaking to a customer service rep at EE for the best price. I got about 25% of my 3311ci that way. If you want to go Polk, the RTi series is better than the TSI and not much more. I'd recommend searching the speaker forum for possbile bookshelf speakers. I currently have Paradigm Studio 10s, which I love, but would blow your budget. The paradigm mini monitor and atom are cheaper and have technology that trickles down from the studio series. You surely can find a better sub than the polk.
Not sure of you interests. Music, Movies, both, games? I went the route of forgoing sub, surrounds, etc and concentrated on the best I wanted to spend at the time for 2 channels only. I'd give some thought into the reciever, 2 really good speakers and adding on from there later. In fact I found I was satisfied with two channels but have since upgraded to floor standers and will stay two channel only.