The budget has been upped a little (thanks to my lovely wife), and this is what I am thinking (though it keeps changing) as a nice little system:

AKG c3000b microphone for my acoustic guitar and vocals
POD XT live
iMac g5, 2.0 GHZ, 512RAM, 250GB harddrive
Mbox with PT Le
Reason 3.0

What do you guys think? I had heard that Mbox has some issues with the newest OSX. Has this been fixed?

Is there anything you can see that is a glaring ommission?

I trust your advice! Thanks!