Upgrade AVP or separate preamp/DAC for 2 channel?


My current set-up is:

AVP - Onkyo PR-SC5509
Amp - Moon MC-8 channel amp
Speakers - Focal Electra Be 5.1 speaker system (1028 fronts, 1008 surrounds, with matching centre and sub)

I'm considering replacing the AVP with a Denon AVP-A1HDCI (with XT32) OR adding a 2 channel preamp / DAC such as the new Audio Research DSPre (DAC and preamp combined).

I'd be interested in any thoughts on what (if any) improvements I might gain for HT and/or 2 channel by adding the Denon AVP or separate 2 channel preamp. Would the Denon AVP significantly improve the multichannel sound as well as the 2 channel sound (I'm assuming there would be at least some improvements on 2 channel over the Onkyo AVP)? Or would I be better off sticking with the Onkyo AVP for multichannel and adding a separate 2 channel preamp/DAC?

Many thanks in advance!
djruss27
I faced the same dilemma and decided to go with a Cary Cinema 11a based on Michael Fremmer's rave review of the quality of its sound, and his contention that a separate preamp was not needed. I knew in advance it has bugs, but after some experimentation, stereo (XLR) and 7.1 (RCA) analog from an Oppo BDP-95 now connect to the Cary in bypass mode. A DirecTV HD-DVR connects via HDMI. The Cary connects via XLR to Proceed HPA 3 and HPA 2 amps, and to a Velodyne SMS-1. The mains are KEF Reference 107/2s with Reference 102s for center and surround. The subs are a pair of Velodyne HGS-15s. This setup is bug free and provides superb sound for music, films, and TV. Everything except the Oppo was purchased used, so the overall cost was relatively low.
Have you had a Pro calibration of your onkyo? I believe K. Rubinson had very good results regarding sound quality after he did the Pro level calibration on his Integra (which I believe is functionally very similar to your onkyo). This avenue could save you a bunch of dollars and headaches.
Thanks again for the replies. Extremely helpful!

Soix, in particular thank you for your detailed reply. I was considering the Bryston SP3 (and the Cary Cinema 12), but no room correction ruled it out. I understand that both sound superb on 2 channel though.

Airkitty, I haven't done the Pro calibration for XT32 but I will look into that for sure.

Based on the responses, I think sticking with the Onkyo AVP for multichannel and adding a decent 2 channel preamp and DAC is the way to go.

In terms of which preamp / DAC, I am partial to the ARC equipment, but any other recommendations would be gratefully received!
ARC preamps with HT bypass have an input or remote button labelled "PROC" for "PROCESSOR".

I build my own speakers, so do a lot of in-room measurements.  The two places where DSP / room correction turned out to be critical was the subwoofer and center channel.  I decided to get a miniDSP.  It's kind of a geeky solution for most though, but in my setup it works wonders.  I have Zero DSP on 2 channel listening, and when movies start up it's a seamless sound.

I also did some room acoustics, with a pair of GIK soffit traps and 5 panels. I'm very happy with the tone.  Now I'm thinking of an ARC 2 channel preamp for better imaging.  We'll see.


Erik
The conrad-johnson ET3 is an excellent preamp,  it is a full featured remote unit that has a unity gain HT bypass......you have a great amp and speakers so something like it would be a good investment