1. You can do either. Just adding the amp will give you the quality power to drive better speakers. Adding a good preamp with "HT Bypass" and a good phono stage will give you a separate stereo system with the ability to still use the AVR. Look at the new Parasound P5 for this application.
2. You cannot have too much power unless you use it irresponsibly.
2. You cannot have too much power unless you use it irresponsibly.