IMO, the Rebel is a good starting point. However, if it were me, and I was looking to get into a good camera, I would buy once, cry once. A low end camera is going to leave you wanting on a lot of things.
As an alternative, I got a Nikon Powershot. It is a higher end point and shoot camera that is 12 something MP and has a 30x optical zoom on it. It was just a bit higher than your price range, but not much. My dad has 6k into his Nikon DSLR, and his is only amateur quality.
The Powershot takes very good pictures, can do full manual or full auto, or anything in between. My biggest frustration with it is that the Fstop range is only 3-7, which is pretty lame.
Anyway just another option. I couldn't afford the DSLR option, and I've been pretty happy with the alternative.
Baby Beast 2- 1999 4Runner SR5
Baby Beast -1987 4Runner SR5-Gone, but not forgotten