upgrading Onkyo 919 reciever to 5.1 and better

I have a Onkyo THX 919 PRO RECIEVER but it is only pro logic (4- channel)I run a set of Definitive BP 2000's for the mains and a set of Bose 901's for the rears.my problem is that when i run in by-pass(stereo)it sounds live, when i operate in any surround mode it sound like poop.I run the eq,that came with the 901's and a 10 band graphic through the tape loop.Is the fact that running equlizers in a processed mode distorting the sound? I have a cheap dvd player,a decent hi-fy vhs but any input being used in the bypass mode with equalization sounds so much superior.I have read that onkyo makes a decent surround processor(ed901).can anyone help me? I thought about upgrading to a Onkyo,denon,or yamaha reciver even replacing the rear surrounds with matching definitive's but for now at least getting a true 5.1 surround to sound like the stereo mode with equalization!is what i am looking for.