I agree with getting a JVC TV. They represent an excellent value in tube televisions. Their VCRs are top notch, and their DVDs are average to above average. They seem to excel at video playback but lack a little on the audio side. Their receivers are competent, nothing more.
If you could spend 500.00, I would highly recommend the Outlaw Audio 1050. It is a DD and DTS receiver with 6.1 channel playback (for a rear center channel). You have to start looking at 1000.00 Denons, Onkyos and Yamahas to get an internal amp that can match the Outlaws.
BTW, you had the basic differences of prologic and dolby digital correct, but dolby digital is not dolby digital prologic. DTS, IMO, is the better of the surround sound formats, but the difference is really negligible.
For speakers, I would highly recommend the BR-1s from
www.partsexpress.com . They come it kit form and require very simple assembly, but you would need to spend 2 to 3 times their cost to get better performance.