Just curious, is a folder like the Brompton a possibility? I don't need to commute (I work at home) but if I did, rather than locking my bike somewhere, I like that in the same time as locking I could fold the bike and simply take it with me. A folded Brompton is something like 21x22x11 and weighs under 30#. However, they're about $200-500 over what your budget is (price depends on gearing and accessories).

http://www.brompton.co.uk/