Trying to improve two channel - direct or preamp?

I have been researching the direct route lately, using passive pre/volume controls. It seems that the best option for that route, is the Bent Audio system using Stephens & Billington stepped transformers. For basic manual controls, they have some units that start around $725. If you want remote control, they have one of the coolest remote control systems that I have ever seen. They have a "base unit" that looks like it comes from the 25th century, which recieves the remote control signals, and then sends the control information by Toslink to some remote boxes that house the transformer controls. This allows you to locate the "Base Unit" anywhere you want, and have the actual controls down near the amp, where they should be. It allows you to keep the cable lengths to a minimum, and have the advantages of the transformer volume controls, and have the coolest looking remote/reciever thing on the planet. Pretty expensive, but very cool. I think that I'm going to build the manually operated kit, but I would love to have one of those cool remote control "base units" on my equipment rack.

I agree on the passive route. The volume controls on CDPs are generally of lesser quality. Instead, route the signal through a passive preamp to regulate the volume control. But with passive preamps you have to be careful about component matching. I have the FT Audio LW-1 passive preamp and I've been very happy with it. All it does is select the source and control the volume; it adds nothing to the signal. Howerver, if this is in your HT system and it will be used for watching movies you may not get the bass response that requires. Passives can sometime have reduced bass (the LW-1 does not), but any passive may have trouble giving thunder to a HT system. Placette passive preamps are also highly recommended.

My experience is that you should by a better ACTIVE preamp, and loop your pre/pro throught the 2 channel preamp's aux input or processor input, etc! Then, you;ll be running your cd player into the 2 channel preamp for music only. This is the easiest and best way for a varriety of music! You won't get the dynamics with rock or heavy dynamic sources via a Passive preamp or DIRRECT VOLUME hookup from a DIGITAL SOURCE!! I've never ever heard ANY DIGITAL VOLUME CONTROL that had enough dynamics tou compensate for what you can get from a good active preamp!! It always sounds weaker in the dynamics and for slam!! If you listen to only low dynamic music such as vocals, instumantals, light chamber music, mellow jazz, etc, you would be ok going dirrect into your amp, or using a passive.
If you're doing rock or heavier percussion music, you can either use the active 2 channel preamp full range, or you can go through your DIGITAL PREPRO, cross the speakers over as "small", and let a powered sub do the rest! This usually is the most dynamic route depending on music sellection. You can try it all of course.
Still, I recommend a separate 2 channel pre amp, with your digital pre/pro LOOPED into an input on your 2 channel pre, to be switched on when you watch movies. That way, you can get the best of both worlds, and maximize the 2 channel when you need it...not affecting the movies at all when you run the processor!
good luck

Transformer volume controls are different, because they lower the input impedance with attenuation, unlike resistor ladder attenuators or pots. This negates the problems with bass and dynamics that were described above.