Help with speaker system for billiards room?

I am seeking advise on a speaker system for a 17w x 24d x 9h billiards room I plan to build in my basement this winter. I listen to mostly Classic Rock, Country and Blues. In addition to CDs, I will be listening to DVD concerts and occasionally DVD-A and SACDs.

In the center of the short wall, there is an existing fireplace niche where I plan to build in a widescreeen and co-locate the center channel. The screen will be installed at a height suitable for viewing from a barstool. On each side of the widescreen there are windows I could build shelves above and have about 20 inches of space between the shelf and the ceiling for the main speakers.

Surround placement will be more difficult as there is only about 12 inches of space from the bottom of a bulkhead and the ceiling. If absolutely necessary and for cosmetic reasons, I could use in-wall or in-ceiling speakers. Another option would be to build alcoves at or above ear level into architectal columns and flush-in a front ported speaker. Will this degrade the sound?

I have a couple of Denon receivers or Outlaw seperates I could use for the front end. An existing HSU VTF-3 will perform the sub duties. I am currently using a pair of Mirage outdoor speakers and the VTF-3 in the unfinished basement and I am quite surprised by the sound. The volume always gets louder after a few cocktails, so the ability to slam should be a consideration.

So far I have considered the B&W LM1s. I think they are cosmetic enough and offer placement flexibity; although, I'm not sure about the sound. I am also considering NHT, Ascend, Paradigm, PSB, and Monitor Audio.

I will appreciate all suggestion and would like to keep the speakers under 500/pair, new or used.

Thanks.