Potential upgrade path…

Always Speakers first.

Backdoor, there is a lot of great information here. In looking at the pictures, am I correct that the floor is tile or treated concrete? If that is the case, I'd do the following.

(1) Get a nice thick wool area rug that fits the space, and get a 1/2" acoustic carpet pad; easy to find with a Google search. This should get spousal approval, as you can let her pick out the rug. Cost $1,500 or so?

(2) Acoustic panels would be a great addition, but not the standard ugly panels. GIK Acoustics have great acoustic panels and bass traps that actually look good. Cost $1,000 or less

(3) Consider the smaller speaker recommendations, as your electronics seem perfectly fine. I replaced my amazing Thiel CS3.6 large floor standers with a pair of Buchardt Audio S400 MKII standmounts, and a system that worked for them. The system is much more fitting for the space, and sounds incredible. For the remaining $33,000 you'd have your choice of incredible stand mounts: Fleetwood Deville, TAD, Fyne Audio F1.8, Magico A1, blah blah blah

Vthokie the room is actually carpeted. Pretty plush carpet actually. Knowing that and also that this room is really not that small (18x24) would you change your recommendation in any way?

Your DAC can be upgraded along with your preamp and Amp to increase the sound quality of your room IMO and experience.  The room plays a part but with your components, you can upgrade your sound to reference level for that amount of scratch.

@backdoor 

Do you have a space to build a dedicated room or an unused room that would work? Don’t assume your larger speakers won’t work in a smallish  room. My room is considered small but my Avior ii speakers sound amazing in it. I had Jeff at hdacoustics design the room and I built it. If you have a room already built that might work I highly recommend consulting with Jeff. He is very good and very reasonable price wise. Good luck!

Ron