Can you put the TV and main speakers on the wall where the couch is, and vice versa? This will allow you to place your mains further apart.
The Denon 2807 will do extremely well. I hear great reviews about the unit, and I used to use a Denon with my Axiom Epic 80 and it was a great combination.
For a DVD player, I would look no further than Oppo. The 981 is superb and only about $199-$229 depending on the deal you find.
Assuming your apartment is soundproof, I would go with an EP500. If that's too rich for your blood, an SVS or HSU would suit your needs.
I personally don't like Klipsch speakers at all. I find them very bright and they induce listening fatigue within minutes. I can't say I have ever heard Definitive Technology, or I have but they were not memorable so I have forgotten them.
For your sized room and with a sub, you could go for M60's to save some money. Personally, I would choose M60's and EP500 rather than M80's and EP350.
