I don't think you're expecting too much. Prices continue to fall on high end digital cameras. There are a lot of "semi-pro" cameras available in your price range if you shop around. I'm an avid amateur photographer. I ended up with a Nikon E8700. It's 8 megapixel with 8x zoom Nikkor lens(35-280mm) and 4x digital zoom. It accepts filters, tele and wide angle lenses. I paid $455.00 for the camera. I purchased a couple 256mb compact flash cards from Walmart for about $33.00 each. You can see lens capability at http://usera.imagecave.com/rodax/
I am currently looking to purchase a digital camera, but need some help choosing one. I have photography experience (it was my college major) but feel like I'm in the dark when it comes to digital cameras. I'm used to using a manual 35mm Nikon with a 28-200 lens. Picture quality is very important as is a fast response time. So far all I know is that I am looking for at least 5.0 mp, a decent zoom lens and have up to $500 to spend (I'd like to get some extra memory with that too). Am I expecting too much? Any suggestions would be great!