Crates aren't my favorite amp, but I have owned one and played on all kinds. The overdrive you'll get from your crate doesn't suck. As a matter of fact I think it has great overdrive, although I have played a couple crates that did have crappy overdrive. Tone, on the other hand, is debatable. Personally I hate most pedals and prefer pre-amps. Not all of them cost an arm and a leg, especially when used. Check out Rocktron pre-amps if you aren't happy with your sound, and keep your ears open for deals on used equipment. As far as the speakers go, you could go with anything, as long as it's not Fender. Nothing against Fender but you said you were looking for good distortion and Fender is more of a blues type of tone. Look into buying Celestion speakers though.
BadHorsie, holdin' it down like Gravity!
Ain't nothin' but a Gear thang, baby!