I'm having trouble finding the S7000 for the 500 USD reported earlier in the thread. But I'm really having trouble finding a truly competitive Canadian camera retailer. Prices go from bad to ridiculous, and many of the online shops only sell in the US.
The thing about the S7000 versus the Digital Rebel is that they are two entirely different classes of camera.
If you can get an s7000 for 500 USD, it's the best camera (handling and image wise) that you can get for that price, MHO.
The Digital Rebel is a substantial step up from there. It's why you really can't recommend any of the so called "prosumer" cameras (828, A1/2, C8080, Pro1) selling for the equivalent of 899-1099 USD here in Canada. The Rebel and D70 just trounce them, even if you slap a budget 28-200/300 on them, you'd still get better results than anything from the 2/3rds cams.
So really, your last stop in Digital P&S before you really owe it to yourself to just get the DSLR should be something like the S7000, Canon G5, Oly C5060 or 5050, or Nikon 4500 or 5400. All are small but definitely not tiny (the Fuji being the largest), all have 4-6 MP, and a wide range of manual controls. The G5, 5400, and the C5060, go wider about 28-110 (or there abouts), while the S7000 goes a little longer, 35-210. I think the wider lenses could be quite useful, so consider your useage. If you start adding all sorts of converters, you might be better off with the DLSR.
I liked the S6900/602/7000 best (having used the C5050, and handled other spilt body Nikons) but I have big hands, and grew sort of biased to the comfortable operation of the camera.