Hi,I'll try to help a bit. Currently the limitations you have is based on your motherboard. You could update to any M socket CPU as long as you stay under 533 FSB, so that even includes some Intel dual core CPU's. The next Step up would be to use a motherboard from a 9400 / e1705 is a 800MHz FSB. The same case is also used for a XPS 1710 and continued on to a Dell Precision M6300. I have owned and still do own several of these units......
Do to the recent release of many precision laptops off of lease the market is flooded with these machines and so with all supply and demand has caused a huge price drop. You may be tempted to look for a XPS M1710, for this is a gaming laptop with lots of blinking lights, but the demand is higher, now having a higher price to a point that I believe is too costly for some blinking lights.....
My suggestion is to look on eBay for a Dell Precision M6300, this unit has so many more possibility's for you to expand. I just purchased an M6300 for less than $100.00, it did have a bad motherboard, I purchased a complete lower base / mobo for $49.00... The service manuals are available on line and will give you all of the needed information to enable you to work on the laptop yourself. I take it that if you were willing to pull your laptop apart, you should not have any problems... this is basically the same case you have now....
The unit I purchased, did not have any memory or hard drives installed. This laptop was turned in to a working machine for a lot less than the video card you want to upgrade to. Laptop Cost $75.00 + Base / Motherboard $49.00 = $124.00, now add a nice NEW 500GB HD for $60.00 and some memory 4gb of the max of 8gb for $40.00 brings my entire cost to $224.00.... I believe this was far below of what you where thing of spending and you wind up with a great laptop.....
PS Your HD will not work, you will need a SATA Style drive intruded in the Dell market with the 9400 / e1705, Stay away from video problems a cost of $50 - $150 can easily be seen. There are some complete working units out there for sale for the price of $250.00 up....
Luck to ya.....