You will definitely enjoy the new system. Congrats.

OTOH, you might even consider taking a step backward and re-evaluating where you would place the HDTV. Above a (high) fireplace is generally considered one of the worst places for long term comfortable viewing. Even having a mount that is able to tilt downwards still isn't really enough to provide a proper viewing angle since it's starting from such an unnaturally high place on the wall. At typical viewing distance, you will still be creating a relatively steep viewing angle, which makes your neck sore after long periods, and has made chiropractors wealthy individuals ;). IMNSHO, it's one thing to have a piece of artwork above a fireplace, but a flat panel display is an entirely different beast.

1)

If you have no other location options in the viewing space, you should at least consider finding a mount that articulates and allows the HDTV to be pulled down below the front of the fireplace. In other words, when the HDTVs not 'on', it's flat on the wall. When in use, it's turned and pulled down to create a more correct and comfortable viewing angle. (Most folks aren't using their fireplaces enough for this to be much of an issue.) There were a couple threads earlier this year covering this topic. Someone even posted a link to such a mount, but I did not bookmark it for future reference. If you can search back through some posts via my nickname in this thread, you may run across it. I'll look around more tomorrow and post it if I find it.

2) The types of connections required will ultimately depend on the equipment you end up using. Employing older equipment w/o HDMI might mean you need other types of connections. For this reason I would suggest you set some sort of rough monetary budget for this project, and also provide all makes/models numbers of your current equipment so we can be 110% certain of compatibility/connection options. Finding an entry level AV receiver would not be expensive though, and might provide for a nice fresh upgrade overall to your AV experience. Basic 5.1 surround will make your system come alive and doesn't have to cost much per se. Since you have the 5.1 Cambridge speakers (which models, btw?), I assume that older receiver (model #=?)does offer surround sound(?)

If you are going with a internet enabled smarttv like one of the wonderful Panasonics, you should consider using ethernet (wired) instead of a wifi connection. It's much more reliable IME and O. So have you electrician add that into the mix if possible. It's not expensive either. Plan 'B' for internet if providing a nearby ethernet connection won't work could also be a wifi bridge, a device that would let you bring in a slightly more reliable signal from your home network.

Looking back again at you equipment list, if you have a DVR/cable box, that would ideally connect to AV receiver via HDMI, and the receiver out to the HDTV via HDMI, or, HDMI from DVR to the HDTV, and digital optical or digital coaxial from DVR to the AV receiver if those options are viable (model #=?) Wink Upgrading to a newer receiver that has HDMI can help a great deal.

3) Why *not* just go for 5.1 since it's so relatively inexpensive and provides great bang for your buck? Movies without surround sound are sort of like a marching band w/o a drummer IMNSHO. Knowing your ideal overall budget would be helpful again before we recommend specific hardware. (It won't cost much for the electrician to hide wires either ,btw) Re-using your current speakers would make this possible too if you needed to save a little $ to get it done. Are they one of these? http://store.cambridgesoundworks.com/Speakers/b/2744206011

4) Most folks swear by Harmony Universal Remotes. You can sometimes find an entry level model @ Radio Shack on sale for $35, or slightly higher. Amazon carries the higher priced ones w/ more features and halfway decent pricing too IMO. Adding some type of IR blaster/receiver would make it easier to control everything if the AV equipment is tucked into a nearby cabinet, etc.

If you can afford it, I would add a Blu Ray player for $100 (sometimes less). Depending on which speakers you own now, maybe you could get by w/ adding an entry level AV receiver as a centerpiece for building this new system.

FWIW, the Panasonic S60 is arguably one of the best values now in an HDTV, and ideal for rooms with good light control. I have yet to look at the S64 mentioned here a few weeks ago. It's apparently a Costco version of the S60, but with the advanced anti-reflective filter of the higher priced ST60 AFAIK. Might be worth a look.