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You can upgrade it by replacing the stylus with a OM10, 20, 30, or 40 stylus instead of replacing the whole cartridge. That Denon receiver has a phono input so it should get you by for a while. The Pioneer home theater floorstanders or bookshelves are speakers that are real overachievers.
You can get a pair of Polk Monitor 40 speakers for under $200; they deliver a lot of sound for the buck.
One problem with HT recivers is that they often are underpowered for operating 5 speakers, which is what they are advertised for. If you just use the receiver to run two speakers, it should work fairly well.
Another very good low-priced turntable is the Music Hall MMF-2.2.