Home theater recomendations

$1199 should be the going price for that projector.
I'm currently running a dell dlp projector that I got free from work projecting to a 92" motorized dlite screen and the pic is pretty good. For the receiver i'm running a denon 2808. Full 7.1 setup and instead of 1 sub running 2 instead. All components on a rack in the furnace room and using ir repeaters to control all components on the rack.
You can go cheap on the screen via diy if you want. You can do the painted wall screen way or diy painted screen. this gives you options for screen size. you should check out avsforums for all your questions.
For the receivers. it depends on your budget.. You can get awsome deals on previous model years on components I've seen the pioneer elite vsx90 for $377, Stick with either Denon, Yamaha, Pioneer, Onkyo for the mid range type recievers.
Here's some models you can look at Pioneer SC05 "$888", Yamaha RVX1900 "$1900" or RVX763"$498", Denon AVR4308"$1488" all in cnd dollars
If you want to go higher end. That's a diff story there.

Home theatre is just as addicting as this hobby.