Speaker location options - none ideal

[blackraven]

Martin Logan Architechtural series speakers are in wall and in ceiling and they are not cheap.

Current MartinLogan Products

PSB, one of my favorite speaker brands make in ceiling/wall speakers-

In-Wall/Ceiling Speakers

I still would not rule out a shelf if you can have decent placement and good isolation under the speaker. Either way, the speakers are going to be above ear level. It's not optimal but you have to pick the lesser of 2 evils.

Other options are buying other bookshelf speakers that are made to go on the wall with a speaker mount.

If you go in ceiling or in wall, don't skimp on the sub. Get a higher end musical sub. or better yet dual subs. There are some wireless subs and wireless modules to convert a sub to wireless. Martin Logan and Velodyne make some nice musical wireless subs.

Powered Subwoofers at Crutchfield.com