Thanks for the cable advice. I can try a new hdmi cable but since the problem is persistent in both the blu-ray and apple tv which use different hdmi cables I doubt that the underlying issue is the cable, unless both cables went bad at the same time ... I wouldn't rule out the possibility so i'll give that a try before buying another unit.
Currently, my thinking is that since I will be using Peachtree to drive the fronts and sub, I can go with a cheaper Denon to drive the surrounds and center.
I really like the Cambridge Audio AVRs but they are a bit pricey for my needs, i.e. only driving 3 speakers.
How would you compare Denon to Marantz? Since both are owned by the same company and built in China, I don't know if it matters anymore.