My brother has a Panasonic FZ100 and thinks about getting a DSLR after my father bought one too. He's everything but a pixelpeeper, and just wants a DSLR for the 'look at me' factor (while, not really, but I guess so

The most important factor is the much greater IQ though.
Just because he's so much in love with his FZ100, he doesnt want to spend too much. And, fortunately, we came across a E-510 with twin lens-kit, Metz flash and LowePro bag. For $240.
My dad and I both use Canon, but as he wants just a good package without needing to upgrade (in the next 5 years at least), and then a Canon 20D/400D may be bought for the same price, but only with a 18-55 II lens, which is nowhere close to the Zuiko lenses! Are we right that he's better off with an Olympus?
Feel free to share your thoughts!