2. O.o yea that's like the gut of the computer, your pretty much replacing the ENTIRE computer.
3. 3 reasons: You want to have about 500W-600W
500W psu are very cheap, $35 to $45 from a good brand if you wait for good deals,
PSU is extremely important, a psu failure can kill your motherboard, gpu, hdd, along with the psu. Very expensive. + Your psu is a nobrand.
i5 processor - i3-2120 if extreme budget
2x4Gb 1600mhz ddr3 RAM
7870 or 660 Ti (Both of these are a little overkill, but the 660 and 650 ti have yet to be released.)
Including the psu, this will cost you under $700.
If you wait for new mid-range video cards and go for the i3 instead, it will cost you about $500. With $500, HoN will max out. D3 I think you will have a little trouble - you'll have to make due with medium-high. In some cases very high graphics. (This is speculative since the actual performance of the 660 hasn't been released yet)
[Edit] Was talking about 660 not 660 Ti. Seems like the 660 Ti is a bit more expensive than I had expected.
Thanks for the replies. I forgot to mention that I'm trying to shoot for ~$300 for the parts I need. It's fine if the games run on low med-high as long as they don't lag or skip. Don't need a monitor, OS, or keyboard/mouse.