You aren’t asking the right questions. Of course the Canon DSLR you can afford will outperform (in most but not all areas) the FZ20 as long as you do not need the 36-432 zoom, the built-in stabilization, built-in close-up capability of the FZ20.
If you plan on buying at least 3 more lenses then the Canon is the way to go. But consider the size and weight of the Canon equipment you would need to purchase to equal what you get in the FZ20.
I use a Canon 1DMkII and a 1Ds with 6 L lenses with a DO lens to range from 16mm to 300mm. But I also use the FZ20 as a light carry around. I use an Epson 4000 for all printing. Now I’m not going to tell you that at 16x20 there is no difference between the three cameras, the 1Ds (soon to be replaced by a 1DsMkII) blows away both the 1DMkII and the FZ20. But at lower sizes the FZ20 can hold its own. No, it isn’t equal to the 8MP 1DMkII but unless you are using a very good printer, the difference would be hard to justify the 20 times dollar cost ($500 versus $10,000) unless you are a pro and need the advantages of the 1DMkII.
The FZ20’s viewfinder takes a day or so to get used to. But is perfectly adequate in most cases.
So the real question you need to ask yourself is how much are you going to invest in your photography? Do you want to make a living from it or is it a hobby to share with family and friends? Do you want to carry around ten to fifteen pounds of equipment? Are you going to spend the time necessary to learn Photoshop or can you get along with Photoshop Elements or iPhoto (if you’re a Mac user).
The question isn’t if you can afford the Canon and its kit lens but whether you are going to be willing to invest quite a bit more to equal and then surpass what you get with the FZ20.
From your original question, I would advise going with the FZ20. As stated in the review in dpreview.com, it is quite a bargain for what you get. After using it for a year, you will have a much better understanding of what lenses you will need to take the type of photography you enjoy. Let’s say it depreciates 50% in that year, so for $250 you will have the answers to most of your questions and thousands of great pictures.
Whatever you decide, enjoy!
Roger