is a center channel really necessary??

IMO Yes center channel IS neccessary If you do not have a great processor in 4.1, OR if you have a 2.0 or 2.1 AND do not have a great processor..
Maybe YOU want the purity of two channel and can figure out the dialog.. but does your spouse want to? or your kids?
So you can spend the money one way or the other. The center channel IS the dialog channel. If you wanna hear what is said in a movie..and are not sitting in the sweet spot, get the center channel. (unless you have $12,000 main speakers?) The rear channels can be small unobtrusive in the wall, hung on a doorknob.. but that center is important, It should match the main in timber.
I have separate systems for music and movies in the same room. Stereo at long end, Movies on short wall. Of course the gurus will decry the extra speakers in the same room, just as having more than one CD source on, or any other of a hunded things they think is the "most important" because THEY noticed something in thier system. (To me the most important thing is doing what i find to work, and not what some jerk thinks..And this I hope goes for you as to MY opinions!)

I don't use a center channel in my HT room, mainly because a lot of the older films I enjoy sound crappy with everything coming out of the center channel only. I would rather spread the sound to both sides, even if some of it is mono. Just my opinion, of course.

I would first set up the 2 channel exactly the way you want it. The speakers are dialed in to their best spot and the electronics are off to the side and your chair is where you like to listen. Then add the extra speakers for 5.1. You can either optimize 2.0 or 5.1 but very difficult to do both equally well. That said, I like having the center for dialogue movies and SACD. Listening to full orchestras with SACD is simply amazing. I recommend the center channel.

For a 2.1 system, couldn't I choose a BlueRay player that downmixes into 2 channel rather than doing it in an AVR?? I believe the Oppo BDP-93 SE does this.

I have a 7.1 setup with 2 x Aerial 20Ts for left/right and Aeiral CC5 for center channel. For movies I definately prefer to use my center channel. It is very good, blends perfectly with my mains and makes dialogue more realistic.