This looks like a really nice system for a small room Ty819. I would make one suggestion since you said you would spend a little more if it was worthwhile.
Change the receiver to the AVR 1912. That will free up a hundred dollars you can then devote to a better sub. The Paradigm SE Sub is tiny but with a very nice amp and can be matched to your room with the PBK (Perfect Bass Kit). The receiver comes with a microphone that, with the Audessy feature, measures your room's acoustics and then optimizes each speaker channel's EQ. Amazing feature. Paradigm PBK does the same but only for deep bass and does a better more precise job than most receiver-based systems.
Go talk to the guy at your local shop and tell him what you want, what you're prepared to spend and see where you end up. If he doesn't treat you with respect he's an idjit. Move on. A few watts or a couple of features typically means almost nothing but deeper, cleaner bass can transform your listening experience.