Consider M60s with 3 M2is as a center and 2 surrounds and you will get in under your $1200 budget. This would accomplish the HT well and give you something to play around with Hi-Rez or 5.1 audio.

If you can't fit a vertical M2i in your center-channel location, you'll have to go over budget ... UNLESS you go with M22-mains. This would be a great HT route with really nice musical options: M22s/VP-150/QS8s and it gets you in easily under your threshold.

Birdman

"These go to eleven."