Best processor that is excellent for 2 Ch music

I'm in search of a similar unit. I need balanced outs, but what I'm wondering is if anyone has compared the analog bypass on any of the mentioned units. I have a nice DAC for 2 channel and would like to know which is best for use as a volume control.

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For the money, and best performance out of both for the money, I suggest the traditional audiophile approach. This is basically keeping a 2 channel setup/rig, while looping a good 5.1 processor into an auxilary or "pass through" input on your 2 channel preamp, as another "source input"!
What this will do is to allow you to have the purity of your 2 channel system intact, as usual. Then, you can simply switch to your input that has the 5.1 processor attached (where all your other channels/speakers are attached to your AV pre/pro), playing the left and right speakers out through your 2 channel setup at unitygain.
Again, you can have your 5.1 pre "off" while doing 2 channel sources, tuner, cd player (assuming quality CD source component,dac's, etc), turntable, etc). This is the best compromise for the money. You can get a superb sounding higher end 2 channel pre for $500-700 range used, often less, and a good Acurus Act 3 (superb for 5.1 movies,dd/DTS,etc) for around $400-500 range used. This is how I'd do a system for a budget, where 90% of your needs are 2 channel, yes!
Otherwise, you're looking at somewhat of a compromise most often in the 2 channel department, greatly leaning on the quality of the preamp section and DAC's in your AV processor! Often, you need to spend lots to try to get high fidelity 2 channel PCM from a pre/pro, as compared to a good 2 channel analog setup.
If you don't want to do this, you might look into used Anthem AVM20. Still, I bet you won't get the same 2 channel sound as what I recommend, with a good CD player/source.
Things are always a compromise one way or another...convenience vs perfomance

I'd recommend a used EAD Theatermaster 8000pro or 8800pro.

I'm using an Arcam AVR300 which is pretty darned nice with an after market power cord.

I also highly recommend Cary Audio HT separates - incredibly good sounding gear for music. It has the house sound of their high end 2 channel gear with the processing power for HT.

In fact, I like it as well or better than Lexicon, Meridian and other SOTA gear.

Cary turns up here used once in awhile, where is is usually snapped up by music lover types who want to integrate music & movies into one system.

I don't doubt the Cary is better sounding as a processor than the pieces Rackon mentioned, indeed. Still, none of these porcessors are going to be as good in the preamp department as a standalone quality higher end preamp! (especially tube pre's, used, for the money!). While the higher end AV pre/pro is going to have good dac's, and good overall processing, the other portions of the preamp stages, analog out's, buffering, etc, isn't going usually be the "ultimate" 2 channel pre, In my experiences.
Still, it's always all usually a compromise. Even high end rigs have lots of compromises, whether their owners think so or not. However, some of these better av pre's have gotten good enough that most would easily (including myself for the time being, as I'm concentrating on HT) satisfy both 2 channel (digitally dirrect mostly) and HT needs! There's some good pieces out there yes.