Now for a couple of my questions. The stock speaker wire that came with the Logitech is cheap plain 18 AWG wire. I have read of people tweaking the twist rates of CAT5 cable and braiding them to make surprisingly good sounding cables. Could I do the same with any ordinary solid core small gauge wire?
Not really. The TNT-Audio chap has some good explanations around multi-core audio cabling, what engineering issues each design attempts to solve, and how to do it. Remember that the only parameters that matter for a signal cable are resistance, capacitance, and inductance--interference rejection is also helpful, but matters little for speaker cables in most instances. Solid core cat 5 (and iirc it has to be solid core, which is harder to find these days) has some specific properties that are attractive. But honestly, I have a home system that wasn't cheap, took me a lot of time, and I use 22ga solid core speaker cable. It works just fine in my low wattage system where the resistance of the cable doesn't matter. Your speaker cable is fine, and unless you're itching for a project, I'd spend the efforts elsewhere.
Also, at some point in the nearish future, I would like to upgrade the front and center channel speakers to something with a bit more substance. The satilites on that system are only 3.5 inch drivers. I was thinking of stepping up to somewhere in the 5 to 6 inch range. I would also ideally want these to still run of the Logitech amp. From my understanding and brief Internet sleuthing, this system has a fixed built in crossover at 120 hz. While the sats can only handle down to about 150. As you can see this leaves a good sized gap and a lack in the midrange. Help here would be appreciated, a at is very much a concern as I currently have 3 car payments for 2 cars for the next 10 months or so.
Like here! So there not enough information to go on still. Is the crossover a 12db/oct butterworth? A corrected 24db/oct linkwitz? (It's probably the former). What is the actual frequency response of the front speakers? The driver size doesn't really mean much. My speakers have a response of roughly 50-16k... From 4" paper drivers. They are full range fostex mounted in a back loaded horn (a mass loaded quadratic taper quarter wave tube for the pedants). What sort of power and impedance are you pulling from the amp?
Unless you wish to make a hobby of it, at which point you can build something *perfect*, my general recommendation is the pioneer bs22 speakers. They were a Best Buy thing for a while, but I think there's more vendors now. Andrew Jones designed them and they are a shining example of a really good engineer doing a really, really good job designing to all the parameters given (he talks about how he at one point had to back and redesign the shape, because the boxes wouldn't fit perfectly in the shipping container). They are about $100 and you can't do better unless you DIY, or go much more expensive. They also generally behave well in most systems. They do go down pretty low, which could cause some issues in your system, but then again maybe they will work. Multi-channel systems can be challenging to tune. If you want to diy, well, then we can have a longer discussion...