so anything under 600 would probably not be a good set without having to upgrade?
Mostlikely, unless you were buying used gear. That 700 price range is a little bit low if you wanted cymbals included. Honestly, the cymbals that come "free" with the kits are never anything of quality. Even a lower-end cymbal pack (Paiste pack with 14" hats, 16" crash and 20" ride) would benefit you. Not just with rock, but with all styles, cymbals are a very defining sound and can make a world of difference. A forum I used to visit regularly just happens to be the best drum forum out there... http://www.pearldrummersforum.com/

As for those holes cut in the reso head of the bass drum, they make it easier for the sound guys to get a better response from the bass drum, like while recording or live. And the towels and blankets that people throw in the bass drum is simply for muffling. A bass drum head is much larger than the other drum heads and vibrates more, creating more of a ring. I bought a bass drum head that has a built-in muffling ring, to avoid the pillow or blanket. Another muffling technique is loosely crumpled newspaper (enough to "fluff up" )in the bass drum, it's basically an experimentation thing to get the right sound. If you think your bass drum sounds too 'ringy' and wanted to do this, you should take off the front head (reso) of the bass drum and place your desired type/amount of muffling inside (making sure whatever you're using to muffle actually touches the head that the pedal strikes) From there it's all about experimentation until you find a sound you like.

Really though, man, I gotta thank you for starting up this thread... it's got me back into drums. I read that 'apple pipe' thread, made one, smoked a lil, then had myself a groove session.