Wait, you can use anything from a 486-Pentium2-to a K6-3 on a super socket 7 mobo, so thats not entirely true KDR.
As for his upgrade, personally I would wait, but if you have to upgrade now, here is what I recommend
Athlon 64 2800+
512MB PC3200 RAM
Mobo based on Nforce 3 250 (socket 754)
Radeon 9800 Pro (215 USD or cheaper on newegg)
Anything else is up to you.
That right there will run around 620 USD, a full system (case, powersupply, fans, drives) would run around 900-1k USD, with a monitor probablly 1.2k
Edit: Home movies, eh?