I recommend the Paradigms very highly. In place of the Yamaha, though, you might want to consider an integrated amplifier like the NAD C325BEE ($400). It's a great amp that the 50W power rating just doesn't do justice. I also think it sounds fantastic with the Paradigm Monitor series. If you must have a tuner (which is basically what you'd lose by choosing the NAD over the Yamaha), you can find great vintage tuners on the used market for not much money. I got my NAD 4020A for about $100, which is on the high side for that model. There's also something to be said for an analog tuning knob.

Your budget may not be large, but I think it's large enough that you can start thinking about an integrated amplifier instead of a receiver. We get a lot of folks here with $1000 budgets, and a receiver is often the better option for them. At your level, though, you can afford better sound. The Monitor 7's will reward you for the upgrade.

What are you thinking about for a source (CD player, etc.)?

I would also look at the integrated amps from Cambridge Audio and the Outlaw RR2150 stereo receiver.

Also be sure to listen to the Epos ELS-303, Monitor Audio Silver RS6, Athena AS-F2.2 and Infinity Beta 50.