Speaker upgrade for classical music

At your budget I'd go with KEFs. If you don't need deep bass (looks like you don't need it for classic music) - try to hear KEF reference 1 (standmounts, 3way),  if you want something still detailed and more bassy (for jazz)- KEF R7, R11

Magnepans or Harbeth. I am a classical cellist and an audio enthusiast since the late '50's. I've owned many speaker systems. The finest loudspeaker ever conceived was the Goodman's AXIOM 80. Unfortunately, they are a memory from the past. I imagine a handful of people around the world still own them. I seriously doubt that any real audio electronics professional has ever designed a system great around these fine drivers. I heard a demo at the Hi-Fi show in Chicago in 1958. The AMPEX suite was demoing their 3 track professional recorder, using 3 speaker system channels built around a quad of Axiom 80's per channel. To this day I remember that demo. The sound was more realistic than any system man has conceived to this day. 

All that being said I feel the closest you will ever come with modern electronics, are the two speakers I mentioned above. They are speakers you can built a system upon and never want for different speakers. Better electronics will bring you closer to audio nirvana. The only thing you might is an REL sub.

I can vouch for a grahm audio awesome speaker as far as a bass issue you would go with the LS 5/8 there is a reputable dealer posting one on audio gone less than half off retail
Best of luck

Audiogon Sorry for the typo

audiokinesis/Duke:  I for one would love to read more about what you're describing. I have two questions in particular: 
1) You mentioned that envelopment can be achieved through a multi-channel system. Do you mean basically playing a normal, two-channel recording through two sets of speakers, one in front of you and one behind, with both sets playing the exact same thing? Or do you mean using special recordings that were intended to be used specifically with multi-channel systems (in which what the front set of speakers plays is not identical to the rear set)? 
2) The other way to achieve envelopment you describe is as follows: "By minimizing the energy in the early reflections, and having plenty of spectrally-correct energy in late-arriving reflections, and using diffusion instead of absorption..., we can use these later-arriving reflections to effectively present the venue cues on the recording. And when the venue cues on the recording dominate over the playback room’s inherent small-room signature,...we have envelopment." I'm confused by this. If we are deliberately emphasizing later-arriving reflections created by OUR OWN ROOM, how is this the same as "the venue cues on the recording dominate over the playback room’s...signature"? By definition, if we're trying to make certain room reflections dominant, then we're not making the reflections captured on the recording dominant.