There's a great debate going on over at $1000 Film concerning the possibility of making money with a micro-budget movie. This is, and always has been, the mantra of Clive and his excellent blog, but it is a radical concept. It boils down to this: you can make something great for a paltry sum, as long as you know what you are doing. It's a philosophy I completely agree with.
Click on the link and read what others are posting (and Clive's responses) for a very informative read. $1k rocks!