Component recommendations: best bang for buck.

I would not say that the Krell is "better" than the Marantz.  They are different.  The Marantz is priced lower because of economy of scale.  It has a huge retail network and will be able to sell significantly more units than the Krell Foundation because of this huge network, hence a lower price that is more accessible to people.

The Marantz is an excellent unit with excellent design.  It has a huge power supply for an HT Processor (40,000uf if I remember right, I think it was 4 x 10,000uf capacitors).  It also has a significant amount of power supply capacitors directly on the analog circuits.  That being said, it is voiced to be on the warm side (like a McIntosh in a way).

The Krell, on the other hand, is very fast, high resolution, lots of fast attack.  This is great if you want a lot of excitement during movies (action scenes, etc.).  I will say that the Krell power supply is sized decent, but not great.  This means that the Krell is not going to be as full in the sound as the Marantz (bass / midbass / midrange).

At this point, it becomes a matter of matching equipment.  If you were going after a warm/full Integrated Amp like the McIntosh MA8000, then the Krell would be a very good match to provide a little more kick for HT purposes.  The warm/full McIntosh would round out the leanness of the Krell sound.  The Krell would not match well with a very fast/detailed amp.  The sound would just be too lean/thin/bright in the end.

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Another note.  These are HT Processors we are talking about, which means they do not have built in amplifiers.  You will have to get an external amplifier to power the center/surround speakers.  This is, ultimately, the better way to go in my opinion because you are not going to get the quality of sound from a AV receiver (AVR) that you are from a good processor and amplifier combination.  This will also allow you to choose an amplifier that is very similar to the 2-channel integrated.  I believe this is very important because matching the "voice" of the front 3 speakers is most critical in HT.  If the amp is very different for center channel, you will definitely hear a change in sound when sounds pan from left to right (which happens a lot in movies).  Some companies will have a 3 or 5 channel amplifier available.

Going with the Krell Foundation option, I've read that I can either go with  a power amp or an integrated amp.  Whats the benefit of one vs. the other?

An integrated amp is just an amplifier has a "preamp" built into it.  This is, essentially, another analog stage that is meant to help shape the sound more and allow you to select from multiple sources as well as control volume.

Since you want a "hybrid" system, you would use your 2-channel integrated as the "amplifier" for the left and right speakers.  You would just connect the left/right outputs of the HT Processor to one of the source inputs of the Integrated Amp.  Some integrateds have a "HT Bypass" or "passthrough" mode that you can use for a specific source.  This will either set the volume at a static point (such as 100%) or bypass the preamp completely.  This way, the HT Processor takes over control of overall volume.  If the integrated does not have a bypass mode, you will just have to set the volume at a specific spot and make sure its the same whenever you want to watch movie/tv.

With the Krell Foundation or Marantz AV8802a, you will need a 3-channel or 5-channel amplifier to power the center/surrounds.  The 2-channel integrated will power the left/right, as I have described above.

I read your other thread. For what it’s worth, I have heard from two sources that McIntosh works very well with Martin Logan speakers.

Sorry, can’t stop thinking about possibilities. Here’s a radical idea. Get the following and pair them together:

- Krell Foundation 4K

- McIntosh MC303 - 3 channel amplifier.

You might be surprised. The MC303 retails for about $11k I think, but it has come up for sale for about $6-8k used (though rarely). There’s actually one on ebay right now with starting bid of $5800 (plus freight shipping, the thing is 188lbs in the box!!). You can get a nice, but low cost amp for surrounds (for now). The surrounds don’t have to match exactly, but they need to be in the same "ballpark" as far as sonic signature goes. The front 3 channels are the most critical to match sonic signature.

There have been several revisions of the Krell Foundation. Krell has already made a new hardware board to support 4K, and there could be other revisions as well. Definitely several firmware versions. I would look for the latest version on the used market, the "4K’ version for sure.

If the Krell didn’t give you what you want as a 2-channel DAC/preamp, you can always add an external 2-channel preamp in the future to create a "hybrid" system, such as a McIntosh C50 for about $4k, and still be somewhat within your $15k budget.