Great discussion... I think a sub is a MUST for HT, and based on his musical taste, I think the M60ti may not be the right choice. The one thing I found when putting together my 'music only' system was that the Studio 60s are much less forgiving of poorly recorded CDs. There are many CDs in my library that I enjoy more on my Monitor 7s. As such, I think I'll suggest the following Axiom based system to him.
1. M50ti/VP150/QS8/Paradigm ps1000 sub --> $2,350.

Add ~$800 for a decent receiver and he's just slightly over budget.

Thanks guys... much appreciated, and feel free to critique my selection.