To make a very long, stressful story short, we ended up doing a major overhaul keeping to a budget of $500. At some point I totally lost track of the budget due to major plumbing issues and sheer insanity, but when you boil it all down we did manage to stick to it. The most expensive part was the little tiles, which had to be special-ordered.
Dave constructed the counter top by hand from simple pine boards. It's a very low-traffic, low humidity bathroom, so we felt OK going with wood, and the softness of the pine wasn't a huge concern. Lots and lots of layers of polyurethane give it some extra durability and water resistance. I wouldn't recommend this kind of top for a heavily used bathroom, though.
He also cut some sweet cubby holes into the cabinet, which was a huge hulking waste of space before. Now we have a place to store extra linens and such.
We tried to reuse as much from the old bathroom as possible. We kept the towel bars and vanity light, swapping out the dingy old glass shades for inexpensive frosted ones, making everything look brighter. We also gave the old faucet a facelift, shining it up sparkling and new with my homemade "softscrub" concoction of baking soda and dish soap.
The biggest thing that we reused was the mirror that hung over the sink. It's your standard boring bathroom mirror, so I decided to experiment with glass etching cream to make a little hexagon pattern that echoed the shape of the mosaic tiles on the floor.
Now I had never used etching cream before, but figured that it couldn't be that hard to use. Let's just say that it's a good thing I tested my moves on an old drinking glass first, because the stuff was a bitch to work with. I bought a blank vinyl stencil made to use with the cream, printed out a pattern template on the computer, taped it to the stencil, and then cut out my pattern with an exacto knife.
The stencil has a tacky backing that sticks to anything smooth and can be pulled off and re-stuck an infinite number of times. It also picks up every piece of invisible cat hair that you might have floating around the room. Here's the stencil stuck to the glass.
Now I neglected to take a picture of what the cream looked like applied to the glass, but let's just say it was a pretty thin, uneven layer. I let it sit for 5 minutes, per the instructions on the bottle, and then rinsed it clean. Annnnd it turned out like crap.
I experimented a little more on the glass and on an old mirror I had laying around, and discovered the magic solution: Lay it on ridiculously thick and let it sit for at least 10 minutes. No streaks. No clear spots. Just solid white goopy goodness.
In the end, I was 60% pleased with how it turned out. The etching always came out slightly streaky and uneven no matter how much cream I applied or how long it sat. But it was a quick way to spruce up the mirror with relative success and probably would work just fine for the non-perfectionist. Would I do it again? Maybe for a smaller, less fussy design. But probably not.