would B&W work with cheap japanese recievers?

I once had my CDM1's with a Yamaha receiver and thought they sounded fantastic. A/B'd the Yamaha with the Arcam Alpha 10 integrated and heard very little or no difference. A Classe integrated beats them both though.

In your case, I would suggest upgrading the speakers first. Most likely you would hear an improvement since you mentioned you are running cheap speakers. You might want to upgrade the amp at a later stage though when fund permits as the 700 series truly deserve better amplification.

Go for 3 matching fronts.
It will sound awful for theater with junk as the center channel. In 5.1 or 7.1, the center gets the most work.
If you can only get Right and Left now, your next move should be the matching center.

thanks to all for your very good suggestions. I'll definitely pony up for matching fronts. Follow up question.

Will I see meaningful sonic improvements from my Yamaha, for the AV receivers in my price range of 1K-2K, e.g. the Rotels/Adcoms?

My setup is likely to be used 70/30 for video/audio. The primary source material hence will be digital inputs from a $300 Scientific Atlanta HD box or a $500 HD-DVD player. I guess as far as the weakest link theory goes, they are far probably far worse than my Yamaha receiver.

No, I doubt you would realize any meaningful sonic improvement by switching your Yamaha receiver for another receiver. Yamaha receivers are pretty good.

However, you could realize a heap of meaningful sonic improvement by taking that $1K-2K and upgrading to the 804S speakers. Your Yamaha would drive them just fine. Also a $500 DVD player need not be a weak link, in video or audio. For example the Denon 2910 is a terrific player.

One of the highest scoring DVD players in the Secrets of Home Theater DVD Benchmark tests (www.hometheaterhifi.com) is the $200 Oppo. The Oppo also has DVD Audio. I would wait on the HD DVD player. As far as I know, there are no HD DVD's out yet. Again, I would suggest you keep the Yammy and spend the money on the speakers. Regarding up market receivers: I have a highly upgraded/modified Denon 3806 with HDMI switching. The switching works fine on the receiver but the cheap cable boxes generally aren't compatible. If I had to do it over again, I would have spent my money a little differently and kept my old Marantz receiver. If you are 70% video then you definitely need a descent subwoofer. The sub is key to a good AV set up. Besides the boom, the sub will take a huge load off your 85 watt/ch receiver. Take a look at HSU Resaerch for good value.