Ditto. The other thing to consider here is the reason they need it... the last camera got stolen. Any DSLR no matter how old (to us) will attract more theft attention than a decent P&S. Plus, as neuro mentioned, there's the dust issue. So the SX500 is likely the best option for a variety of reasons.
The possibility of a DSLR attracting unwanted attention was actually my first question to my dad. The main reason a DSLR is on the table is because it's what he originally asked for. I think he was a bit frustrated with his crappy point-and-shoot camera, and knowing the kind of pictures my wife and I get with our DSLRs, he wanted something with a lot more reach, but decent quality. My preference for them would be a decent PS with good reach and decent quality like the SX500 suggested here.
Thanks for your feedback everyone!
It's the reach part that is going to send you over budget with a DSLR kit. A nice used 40D or Rebel (do they want video or not?) would work great but getting a decent lens with reach isn't cheap and if you get a decent lens with reach, you also need to get a decent general purpose lens for casual shooting and/or low light. Something like a 40D + 70-300 IS + 28mm/1.8 prime perhaps? That gets you reach, low light and an easy to use casual walk around prime on the crop sensor. Total cost would be around $450 + $300 + $250?? But you still need a bag, batteries, and you're already over budget. Or a single ultrazoom lens like the Tamron 18-270 VC but you're not saving any money, just not having to change lenses and you lose the low light part.
I still say the high end P&S is the best way to go for everything, including the intended users being non-technical. Much simpler and less to carry and worry about.