Home Theater or Two Chanel sound Quality ?

If you can get your hands on a Krell HTS or an EAD Ovation you will have the best of both worlds. They both do an excellent job of producing music. If you don't mind them being a 5.1 system. I used to own the Reference 50. It is a nice unit but it is in a different league than the Krell and Ovation. All three have balanced xlr's. The EAD, unfortunately, only has and xlr output. I also used to have the Denon 5800 and I was pretty disappointed with the unit. I presently have a Yamaha RX-Z1 which doesn't excite me too much either. If you can stay in the separate component mode, do so. I am presently in the middle of a trade for the Krell HTS. I have heard this unit and this puppy, in stereo mode, runs with the rest of the Krell big boys.

I would agree with snootybiffer here, Even the Proceed AVP-S would be a huge upgrade for 2 channel comparatively to what you're looking at, very good in 2 channel and very good in home theater modes.
I keep my amps seperate as well and it works for me.
There is one dvp that i would recommend if you dont want to have seperate cd and dvp, the Meridian DVP 596 is actually a pretty incredible piece for 2 channel and fantastic for home theater.
I use a 596 Phillips and Wadia for 2 channel and it works fine,, problem is,, you start getting one very large rack of gear for all this stuff!
Good luck!

#1 Yes. A separate CDP and a cheaper DVD.... unless you intend to do a lot of SACD/DVD-A. If the 5900 is $1600.00 then I would say split the bidget....$1000.00 to the CDP and $600.00 to the DVD. But clearly the SACD/DVD-A question is the hangup. The more expensive SACD/DVD-A players open a wide gap over the less expensive ones, performance wise. Its not exactly the same with CDPs, you can get very good performance from a well chosen budget player.

#2 No to the Ref50. A used Anthem AVM20, EAD 8000pro, or Krell HTS will only be a few hundred more, and all are certainly a better choice for 2 channel sound quality (some of these may be 5.1 only). If you can pony up a little more, the EAD 8800pro is really good at 2 channel, but so far for me, the Bryston SP1.7 has been unsurpassed in 2 channel sound and is my top pick. (yes, even in a head to head vs. the beloved EAD8800pro)

#2.5 the amps? Hmm, I think you will be OK with that choice. I dont have a ton of experience with B & K amps. I had a ref7250 and the 200.5 around a bit. Both seemed like solid performers for the money with no readily apparent weaknesses.

Something to think about, especially if you are a 2 channel guy, like me. For the best possible two channel sound.... why not get a dedicated two channel preamp with a theatre bypass and a cheaper but decent Processor for DVDs. If I had to do it all over again this would be the route that I would take.