Killer Kitchen System under $800 or so?

Self powered speakers are the best way. then all you need is a source.
I have a dirt cheap setup with computer speakers ($125) and a Goodwill special CD changer ($10)
Sound is great.
With $800 I would buy the A5 Audioengine speakers and find a cheap used changer.

I really like this one:

http://www.amazon.com/75300-Spacemaker-Digital-Under-Counter-Mounting/dp/B0009FUAR4

but the Sony one is nice as well.

Keep in mind that in a kitchen you won't always be even close to the "sweet spot". Most of us move around in there. Also, with guests they will most likely never be in the middle.

With that said, I use big in-wall paradigms mounted fairly high up (consider that you will be standing usually) with a really clean amp. If money didn't matter, the speakers would be Thiel Powerpoint or Triad.

I mounted them so the center is at my stove where I'm cooking. This way the people sitting at the breakfast counter won't have one channel totally overwhelming them.

My DAC of choice is always a Musiland. However, if you are going in wall on the speakers, go in wall on the rest of the system too? Or at least hide the gear and have an in-wall IR sensor and volume.

My wife is using a Teac Reference mini all in one (CD, Internet radio, integrated) in her office that costs about $500 . Quite impressive for the price. A cheap used DAC and a pair of speakers and you are ready to go.

The airport or sonos into an HRT Streamer+ asynchronos dac into NHT M00 powered monitors.