I went the expensive route. I spent around 1500 (Springs, shocks, all new mounting hardware), but I did the installation myself. The Fred Beans Parts conversion kit for $1000 it includes a lot of parts you do not need if you looking to do it as cheaply as possible. Old parts can be reused. My car has 70k miles on it and I wanted to replace everything.
BAC5.2 has a nice write up of the parts needed here: http://legacygt.com/forums/showthread.php/my-bilstein-obxt-setup-154057p3.html.
Don't forget the Legacy bumpstops, they are cheap.
If you do the installation yourself you can probably do it for a little over $1000. If you are handy with tools you can save another ~150 making the spacers yourself.
Handling - there is a huge difference.
Stock the car has a lot of sway, the back sways a lot, the car dives (and swoops?) a lot while braking or accelerating. This is all gone now.
Every time I drive it I think, "this is how a car should feel." If you have been in any BMWs it feels very similar to them, imo a little better (the ride is a little more compliant.
If your wife wanted and Outback because of the ride height. This is not the route to take. This thread details the alternatives: http://www.subaruoutback.org/forums/81-wheels-tires-brakes-suspension/28368-2005-2009-outback-suspension-faq.html
I still need to take it on some mountain roads to see how it really handles, but daily driving is very improved.