Question, when you refer to your rear speakers not working in your room, where where you trying to place them? behind you? If so that is not where they go in a 5.1 set up. they should be more beside you, 90-110 degrees is optimal. I have my couch up against the rear wall and run the surrounds at roughly 95 degrees from the listening position and both are roughly 3 feet from the arms of the couch (works out be about 4.5 feet or so from the middle of the couch - ie listening position). running the audyssey auto set up on my avr will adjust the trim levels appropriately for the surrounds to the point that I do not find them distracting, instead I get a nice enveloping surround sound experience.
As far as running a 2 or 3 channel set up that is up to you. I have a 3.0 set up in my bedroom and often i will listen to it in just stereo mode. some times it sounds better and sometimes the appropriate surround mode for the content sounds better. I do like having a center channel over not having one, in case of dialog intelligibility issues or listening too far off center, I can turn it on and problem solved.
running high channels on your front stage requires you first to have surrounds connected and a 7.1 avr capable of matrixing content to height channels. there are a few ways to matrix content into the heights with dolby PLIIz and audyssey DSX being the most common. I like what PLIIz does for height channel content.
I don't need snobs to tell me how to think, thank you!