I'm putting together a new home system after many years spent with a headphone amp and a set of Grados as my "quality" listening environment. :-)

Though I'm generally pretty skeptical of using a receiver as a power amp it looks like if you need to switch a bunch of digital inputs, some of the HT/"multimedia" receivers are the only inexpensive way to go. I ordered a JVC8010 (many digital inputs all the usual decoding features, 120W per channel at what looked like reasonable THD) figuring that at $265, what the heck.

I'm looking at using M3s and a Hsu powered sub for the front soundstage. Are these going to sound decent when driven by the JVC receiver, or is it pretty good odds that sooner or later I'll end up with a real power amp?

You are going to be amazed that anything could sound so good. Have fun.

There are numerous hifi manufacturers that make separate pieces that can be assembled for a very good system. However, the cost could be prohibitive for some.

Receivers of good quality can sound good, and provide a very good listening and watching environment. I would be inclined to say "if it sounds good to you, it is!". You may require greater power, newer features and expansion after using your system for a period of time. On the other hand, this may be your Xanadu!

Wouldn't "Nirvana" be a better metaphor than "Xanadu"?