I'd throw in another 7600GT if I were you, unless you can afford a better card
Its a great card though.
As for the processor, you could get a 3500+, and then overclock to past 3700+, and could buy some more with the extra money.
overclocking is a very strange thing though, and couldn't tell you for sure how reliably your new system would cope, or how much it'd be able to overclock to. Neither would I be able to state how hot it'd get in the process, so maybe it is worthy to keep what you have at the moment
But if you knew your knowledge, you could do that I'm pretty sure with effective cooling in mind.