How to tame the midrange???

Thank you for all of the advice. I have been away and unable to respond.
GMood1....thanks for your comments. You confirmed my suspicions that a DAC, tubed preamp, and seperate two channel is the way to go. Others had the same advice. I just needed to hear it from others with more experience before I start shopping.
Dave......I am happy to know the Sunfire sounded good in your system. It is the one piece of gear I was most suspicious of. I think you and Larry hit it right on the head with the "cumulative" theory.
rrsclyde.....Thanks for the heads up on Music Choice. I will be dissappointed if I cannot run that through a DAC. Gotta check on that one.
Owl....I have dedicated lines and a new electrical service right down to a new transformer at the pole. I will try conditioning if all else fails.
Mikesinger......nope, not a trick question thread. The Radio Shack cables were left over from some car audio projects. I do not want to buy I/C cables until all of the final components are in place. The speaker cables are MIT-2. They came as a package with some speakers I bought. I know they are not the best. I will replace them with something more suitable when I do the cable thing. I am not so sure I could hear the difference cables would make when the existing components seem to be so poorly matched. I am using balanced cables to the amps. These were made by Blue Jean Cables. I assume they are good enough. Please correct me if I am wrong.
So, it seems that this is a good time to take the gear to the next level and hope to solve the original problem along the way. Here's the plan:
1) Buy a good DAC. I do not see the sense in doing mods on the Denon DVD player to try to make it sound like something it's not (a good CD player). I can add a DAC now and a better transport later (if needed). I like the flexibility aspect.
2) Buy a good two channel tube preamp and seperate the two channel from HT. This is a change that everyone seems to agree on. I think the tubes would tone this system down a bit and get closer to the warm sound that I probably prefer anyway.
3) Better I/C and speaker cables. A no brainer really, but I am saving this for last. Until I have all of the final pieces in place I will not know what kind or length cables I will need. I have probably logged 1000 miles in the past month just moving stuff around.
4) I am really saving room treatments for dead last. The use for this room is evolving over time. It was supposed to be dedicated HT, but I am over that. I will be adding furnishings that will soften the room a bit. Once that is all done I will see where treatments are needed.
I know this all sounds "matter of fact" but I am really just thinking out loud. It seems that if the "cumulative effect" is what is causing the harshness, then the answer lies in wholesale changes as Larry suggests. I am trying to make these changes while following a systematic upgrade path and then follow through on the basics. Anyone who has read this far must certainly have an opinion. I would appreciate your feedback before I start shopping. Thanks again.

Gmood1....thanks for the final push in the right direction. I have at least two good high end stores nearby, so auditioning gear should not be a problem. I hear ya on the cables thing.......can't wait to do some comparisons with some borrowed cables. Thanks to all who responded.

Jafox......that's a great idea. I am in Silver Spring, Maryland. Just outside of DC. If anyone wants to help me spend some hard earned cash, c'mon over! If you have been into this hobby for more than a year, your knowledge is no doubt superior to mine. My e mail is ahcjmh1@prodigy.net

Gmood1.... As I was reading the response from Velocitydls I knew his advice went against the grain of everything I have learned here over the past year. As much as I appreciate that he took the time to try to help, I think he is either a very proud Meridian owner ( nothing wrong with that), or a Meridian seller(Hmmmm), or just not that well informed. Either way, I am sticking to plan A as outlined above.
I have settled on the Audio Mirror DAC and hope to place the order today. After reading about it here and elsewhere I have learned that it tones down and smooths out the treble without sounding too tube like. Also does bass well. There were enough descriptions of the sound that I felt ok with buying it before I hear it. Also, the descriptions were the same in every review I read.
The preamp will be a different story. I plan to listen to a few preamps in my system before I buy. Aesthetix Calypso is on my short list. Is there another preamp I should be considering? Hopefully for less than the 4500.00 Calypso? Balanced outputs and a remote are the only absolute requirements I am aware of at this time.

Shadorne.....I did describe what I am hearing accurately, but I should have also said to what degree I am hearing it. On a scale of 1-10 with 1 being sweet laid back treble and 10 being harsh screeching, this problem is a 2 or 3. Not a blown driver or anything close. The problem does increase as the volume goes up. Would this indicate that it is the room? I do not know if room problems increase with the volume. The problem can be heard from normal conversation volume on up. I am super sensitive to this since I am having the same problem with an expensive car audio system I recently completed. I hear it in the car all day and then in the house. AAAARRRRRGGGGHHHH!
Robm321......I hear ya. I am getting to the treatments. It is interesting to note that I do not have a hint of glare or harsh grainy sound in my bedroom system. Adcom front end with B&W 805N and Velodyne DD12 sub. For critical listening, this system kicks my big rig's butt. I believe the "soft" room is the key to the sweet sound I get from this system. The heavy drapes and tapestries were there before the system.....the placement happened to be just right.

Jafox....Thanks for your suggestions concerning which preamps to check out. I am currently trying my local dealers to see what is available to audition in my system.
velocityvls.... No, I do not know enough to judge who knows what. Just look at my user name! However, at some point I have to look for agreement amoung those who know vastly more than I do. Your opinion represents " the path less traveled" as you stated. That does not mean you are wrong, just that your opinion is not shared by the majority. I am looking for continuity. No disrespect intended. I planned to seperate HT, add a DAC, and add a tube pre before I even started this thread. Since the majority of Goners agree with this approach it is the path I have chosen. If I do not get the results I anticipate, I will accept your gracious offer to listen to your Meridian. I do not think swapping one component will solve the midrange problem all by itself......regardless which component it is. There seems to be a conglomerate of problems. I am surprised the system sounds as good as it does. If I add a DAC, add a tube pre, swap cables, add room treatments, experiment with speaker placement, and then do not achieve the sound I am looking for, then you can bring on the tissues.