Please recommend a top-notch bookshlef speaker

It would be difficult to beat a pair of VonSchweikert VR1 monitors. Check out the review in Stereo Times online.

I second the VR1. I have had a pair since Sept and couldn't be happier. Good bass down to 50 HZ or so, small rear port allows placement in almost any place, and such a sweet, smooth and non fatiguing midrange. The design allows a wide range of listening positions. Deep and wide soundstage, speakers disappear. Great crossover. I have mine on a bookshelf and they are not boomy. Wife loves em! Beautiful fit/finish, great cabinets. Look great without the grills (and generally sound better without). They are very efficient at 89 db and 8 ohms easy to drive. Sound good with any type of music--pop, rock, jazz especially. I am listening to Diana Krall and she is filling the room. I run a 100 wpc Forte 5 and and adcom gfp750 in passive mode. Rotel 971 HDCD for source. Wireworld Atlantis II. ICs are Kimber Silver Streak WBT. I don't run a sub but they would sound really full if you did. You can find a used pair for around 600-700. Negatives: discontinued, and can't bi-wire/bi-amp. They are a bit deep on the shelf, but they work on my 10" deep builtins.

If you have power, a pair of NHT classic 3 might be nice too. They are sealed but really crave current. You'll get more dynamic range out of these guys. I have a pair in my HT setup. I still think the VR1 is more musical. If I could do it all over again I'd get VR1s all around in my 5.1 setup.

Be careful placing things on shelves in cabinets - it will collapse soundstage unless it is done very carefully and quite deliberately (a construction project).

ATC 7s, Neat, Harbeth, Epos all make nice monitors.

For something completely different, if space is critical, try Audioengine 5s.

North Creek Kitty Kat Revelator. Made especially to sound best within three inches of the back wall. Tiny, wonderful speakers with amazing bass and midrange smoothness from top notch drivers and crossover components. The only thing you give up, with these or any other speaker placed back to the wall, is soundstage depth. These guys lose it the least of any I've heard, and the price is great because factory direct.

Truly, their bass is amazing. 3 dB down at 35 Hz. Chances are you won't need a sub.

A book shelf would give me more placement options and not violate the wife's insistence that I am not to cut any holes in the walls or cabinets.

Oh thank heavens! She didn't say you couldn't cut any holes in her... Then you could put whatever you want, wherever you want!

In any case, I would get the Dynaudio C1 or Revel Gem2, or Revel Voice2....

My favorite is the ProAc One SC. A fantastic stand mounted monitor. Dynamic, fast and disappear as good as the best will.

what are you driving the speakers with?

I am using a Denon 2808ci receiver, and blue jeans cables.
I intend to place them in a built-in cabinet. I may have to enlarge the pre-existing speaker grills to fit a more modern [air of speakers. There are three of them, and it is a large open floor plan at least 1500 sq. ft. Opens to several rooms, including the kitchen, DR, LR and sunroom.

A speaker that rarely gets much mention, but offers excellent performance, is the Sequerra MET 7.7. The speaker is designed and made by Richard Sequerra, probably best known for this high-end tuner some years ago. The speaker is now offered in both a standard model and a self-amplified model. I owned a pair of MET 7's for a number of years and sold them quite reluctantly. Here is the link to Sequerra's web site:
http://www.sequerra.com/electronics/data/index.htm

I am surprise nobody mentioned the LS3/5A or the LS3/5A V2. The former is no longer in production but you can get the V2 from Stirling Broadcast. Add a sub like the AB1 and you are in audio nirvana.

Look for a pair of used/demo Allison 4's - I found a pair of mint demos. The beauty of them is that they are designed to be used against a wall. Otherwise, North Creek Kitty Kats, also designed to be used against the wall.

ATC's, I moved to a pair of SCM-12s recently and have them close to the wall with no ill-effect (sealed design). Oh and by the way they ROCK!