Phono Input or new Phono preamp?

Some of you may have been following my recent post regarding my foray into Analog. After much consideration and loads of helpful advice, I have decided to purchase my first Turntable setup.

The turntable is going to be a VPI Classic I and I am seriously considering the Dynavector 20XH Cartridge. My current Amp/Pre is a Musical Fidelity KW-500 Integrated and a pair of Focal/JMLab 1027be speakers.

The Phono input on the KW-500 is MM (2.5mV - can't seem to find the gain figure published anywhere). From what people have advised so far, this input should be able to handle either a MM or a MCHO cartridge. With the Dynavector 20XH rated at 2.8mV, it seems like a good match but again, I'm completely new to this.

Because the KW-500 was such a limited production piece (500 units), there is very little mention of it's performance as a phono preamp anywhere else on the net. My concern is that I don't want my existing phono input on the KW to be the weakest link in the analog chain right out of the gate. If this is the case, I'd really like to consider the possibility of a dedicated Phono preamp.

I'm looking for opinions on whether you all think I could get a better preamp for somewhere in the $500-$800 range than what I can currently get out of my KW-500 phono input. If I WAS to go with a dedicated phono pre, I would likely also then have the option of going with a MCLO cartridge (ie. Dynavector 20X 1mv Special). Does the 20x 1mV tend to fare more favorably than the 20XH (2.8mV)? In what ways does it's sound vary (for anyone with first hand knowledge of the two)?

Any advice is greatly appreciated!

-gh0st