Hooking up my JL sub

1. If I connect using LOC most on the market are for car audio and says max RMS 50W. Is that a concern.

Jensen Iso-Max SP-2SX is your answer, it use transformer isolated the speaker output to xlr output up to 750W! And you don’t have to worry any hum introduce to the system or upgrade to a balanced power amp.

https://www.parts-express.com/jensen-iso-max-sp-2sx-2-channel-speakon-speaker-level-to-xlr--line-lev...

2. Once I successfully connect the subs using LOC and adjust the crossover on the sub - can I have another XLR connection from my Marantz AV to use as LFE for movies? Will dual setup work?

Check with your subwoofer manufacturer, most subwoofer in the market don’t accept both connection simultaneously, you can use a ARX RS-1 switcher switch between 2 channel from DAC1/LOC and Marantz AV7005 sub out.

https://www.markertek.com/product/arx-rs-1/arx-rs-1-remote-switcher-stereo-xlr-balanced-remote-contr...

@ozzy ,
Yes, power amp with binding posts will need NL2 to Banana / Spade cable.

https://benchmarkmedia.com/collections/all/products/benchmark-speaker-cable-nl2-to-banana-2-pole

Probably the easiest and best way would be to use either an electronic crossover, or just simply use a y adapter.

Yes, I agree! But you still need to use a switcher.

Why would you need a switcher? The sub would be hooked up all the time. It goes off by itself after no signal for about 15 minutes.

Sorry I didn't make it clear, the switcher is for the subwoofer to select input from either the DAC1/LOC or Marantz AV7005 sub out.

https://www.markertek.com/product/arx-rs-1/arx-rs-1-remote-switcher-stereo-xlr-balanced-remote-contr...

Probably the easiest and best way would be to use either an electronic crossover, or just simply use a y adapter.

Benchmark DAC 1 has both unbalanced and balanced outputs, the unbalanced rca output connect to Marantz AV7005, balanced xlr output connect to JL F112 sub xlr input directly or via a switcher, so no 'y' cable/adapter needed.

Passing signal to my Marantz in Pure Direct mode cuts the signal to the subwoofer. Can I use a RCA Y splitter and pass one signal to Marantz and the other to JL audio?

Maybe I misunderstand what you want to accomplish, since the DAC1 has both unbalanced and balanced outputs, and your Marantz AV7005 only accept unbalanced RCA analog input, I assumed you connect the DAC1 to the AV7005 via unbalanced cable.
You can connect the DAC1 to the JL Audio F112 sub via balanced XLR cable without using a Y splitter or LOC!. To watch movies of course you need to swap input of the F112 by plug and unplug both XRL cables from the DAC1 to AV7005 LFE output or using a A/B switcher.

https://www.amazon.com/Audibox-Switcher-Stereo-Signal-Switcher/dp/B00ASVXBO8