how to set up good home theater sound (and picture)

What are you using for amplification? I use a Marantz 7011 receiver which is basically your 7702 processor plus a built-in 9 channel amplifier. I use Apple TV for streaming and it sounds quite good.

My Marantz system is in the same room as my reference 2 channel system and I can compare the two systems easily. Without getting too much into it, I really enjoy listening to my Marantz system when I want a change of pace from my 2 channel system.

If you have not done so already, try using the Audyssey room correction feature which should have come with your 7702 processor. It is simple to use and improved the sound quality of my HT system.

The other thing that I did that really improved the sound quality of my Marantz system was to add a pair of subwoofers. After applying Audyssey room correction, my subs seamlessly blend with the rest of my HT speakers. I get a big soundstage with solid and precise imaging with this setup. I second auxinput's sentiment that the sound is "a very refined and full sound with lots of impact."

I forgot to mention - for most music, I use the Apple TV as a Roon endpoint. Sound quality through the Marantz is surprisingly good. I also use a Squeezebox Touch with the Marantz which is even better. 

I"m using a Theta Dreadnaught II for amplification. It's a combination 2-channel/HT system and I have a separate DAC and preamp for the 2-channel (with a HT bypass, all feeding into the Dreadnaught), with a Rel Storm-III sub. I did set up with Audissey. I'll check the settings on the fios box for sure, thanks for that suggestion. I'm pretty sure at least with the PS4 it's set up properly for the best signal to the Marantz. I'm just surprised that a digital output through HDMI (all brand new cables, with 2.2, high speed and everything) from the PS4 isn't better than what I'm hearing. 

If you are using a "FIOS TV One" box, it is likely that you can upgrade that external wall-wart switching power adapter to a linear power supply. Just make sure you figure out the exact size of the DC plug and the voltage used (such as 5V or 12V or something). You can find a china linear power supply on ebay for $100-200 dollars. These are decent enough to give a big improvement over the switching power adapter. Just as a side note, I have seen a significant improvement on audio/video quality for a Tivo by adding a 12V linear power supply for it.

As far as PS4, I don’t know. It uses an internal switching power supply with multiple voltage outputs, so there really isn’t anything you can do. I believe it was engineered mainly as a gaming platform with media streaming support as well. It’s definitely not an "audiophile" device. If you wanted to stream with an audiophile level, I would look into something like a Roku device, then upgrade it to a linear power supply (BIG improvement). Or a Tivo. The Amazon FireTV cubes seem to have a weird power connector, so I don’t know about that one.

Googling, I see that there is a " pendoo Android 10.0 TV Box " using the latest Andriod 10.0 operating system available from Amazon for $55 if you want a more generic "android" streamer (instead of a more prioprietery Roku or Tivo).

The HDMI cable also has significant impact on sound quality. Just because it’s "HDMI 2.2" or "HDMI 2.1" certified doesn’t actually mean anything. A lot of these 2.0/2.1/2.2 cables really aren’t any better than older HDMI 1.3/1.4 cables in a lot of situations. Most will pass 4K, but it doesn’t mean anything about quality. I know of cables from 2007 (such as Wire World Starlight 5-2) that will also support 4K in the 1-5 meter length without anything special, but these cables provide a superior audio/video quality.

The best HDMI cable for the money I have found is Nordost Heimdall 2 with its 25awg solid core conductors (at a minimum 2 meter length). The older Wire World Starlight 5-2 or 6 cables are readily available. These 5-2/6 cables have a larger 24awg conductor, but lower grade copper and you -might- get some brightness/harshness from them (probably not with Marantz). However, they have better resolution and more "oomph" in the bass/midbass area.

Always get minimum 2 meter HDMI cables (even if the components are close). Short 1 meter type cables have problems with high frequency response and video sharpness due signal reflections on such a short cable.

Thanks all for your suggestions!