Are you at all comfortable with DIY projects? If so, I'd suggest making the cables. Making your own version of the Kimber braided IC's is really easy, and the DIY extension cord speaker cable (from Lowe's, Home Depot, or even Walmart) is even easier. If you're not into that idea, then just start him out with Blue Jeans Cable. It'll leave a much larger chunk of the budget for quality gear than almost any other product out there, and won't be completely outclassed by gear in this price range.
As far as components go, you might find that a Peachtree integrated would be a good choice as the built-in DAC is excellent, and it would allow for a computer source via the usb input. I would recommend reasonably efficient speakers (>=90db) as the power amp isn't very stout (in the iDecco I use). The main complaints about these things have concerned the power amp, but you should know that it's not suffering from the usual class D issues. It's grain-free with a nice tonal balance - just not the last word in resolution or dynamics. If you went for the Nova instead of the Decco, you'd have a better power amp and more flexibility for inputs. The other great thing is that if he decides to keep upgrading, the Peachtree makes a really nice preamp and headphone amp, just a DAC, or an all-in-one second system further down the line.
If you're wanting to go in a completely different direction, let me suggest a loudspeaker. Look for the Martin Logan Aerius or Aerius i. These definitely thrive off of significantly more power than the Peachtree can provide, but they're brilliant speakers. With the right amplification, I really think you'd have to spend a ton more to beat them. They should be 8-900 used (maybe $1000 with shipping if you can find any locally). I really can't recommend these highly enough. You can probably find a used Adcom 5500 or B&K EX4420 for < $400 that would be a nice match.
