At what point does a stereo become "good" quality?

Good question. It's actually easy to answer. I'll start with a general idea, then provide lists of confirmed examples.
 * A stereo becomes good when you are happy to listen to it for long periods of time.
 * This can include bookshelf systems with ipod docks!
 * A stereo becomes good enought to use to test new pieces at a very specific level.
 * This is hard to define, but doesn't happen when you plug in something new and everything sounds better. It happens when you can compare 2 options for something new and hear the difference between them.  After all, that's what you're trying to do, but so many people make this mistake!
 * A stereo becomes great when it starts to sound like real life.
 * This includes dynamic range, detail, soundstage, imaging, etc.

For all recomendations, if no explanation is given, assume it at least breaks the barrier to sounding "real"

Recordings that are great for demos

 * 1) El Oso by Soul Coughing
 * 2) This recording is the best at presenting a 3d soundstage. Many songs have artificially created sounds that fill the room in 3 dimensions.  artificial or not, with most stereos you wouldn't even know!
 * 3) Dark Side of the Moon by Pink Floyd
 * 4) Mobile Fidelity
 * 5) boxed set remastered version
 * 6) immersion remaster
 * 7) In song 3 a man is running back and forth down a hallway. The level of detail is very telling.  On the best systems you can hear that he turns in little circles at each end of his run... and whether he goes clockwise or not in those circles.
 * 8) Patricia Barber
 * 9) Diana Krall
 * 10) acoustic guitar
 * 11) spanish acoustic guitar
 * 12) acapella (singing without instrumental backup)
 * 13) Mondo Head by Kodo (percussion)

Some source components

 * Denon DVM-3700 or better, or newer
 * the analog outputs of this mid-fi Japanese company can actually produce a 3d image
 * Arcam FMJ or top model from Diva line
 * Esoteric
 * DCS
 * Bryston

Some amplifiers

 * Arcam
 * B&K reference
 * Anthem Statement
 * Classe
 * McCormick

Some preamplifiers

 * Arcam
 * B&K Reference
 * Anthem Statement
 * Classe
 * Audio Research
 * BAT

Some speakers

 * Paradigm Reference or better
 * B&W 800 series or better, or even "one worse" whatever they're calling it at any given time
 * Magnepan
 * Vandersteen model 2 or better
 * Totem
 * Nola

Some Speaker cable confirmed good

 * MIT
 * get over the fact that it has a huge box attached long enough to listen to it. To this day the best speaker cable I've ever heard.  it's hard to find any other brand that can achieve 3d.
 * Shunyatta
 * Tara Labs
 * sounds exactly like MIT... without the boxes though. some of MIT's models go beyond what Tara can offer though.
 * DH Labs
 * At the low end, it sounds better than most typical spools of wire, yet can't compete with Tara or MIT at all.
 * Ixos
 * sounds ever so slightly better than monster, yet it's slightly cheaper. chalk it up to their braid technology which approaches a right angle better than twisted pair does.

Speaker cable confirmed bad:
considering the disbelief surrounding speaker cable, this section addresses one of the culprits of that disbelief: snake oil.
 * Nordost
 * This cable sounds harsh and bright. It is a ribbon of parallel conductors.  In any "introduction to electromagnetism" physics class it is learned why this is a huge NO NO for any cable carrying a signal.
 * Monster
 * The king of overpriced cable. It's not that it sounds bad.  It's that they completely lie about why they sound good, and about being an audiophile brand in the first place.