Trying to improve two channel - direct or preamp?

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.

There are pro's & con's to both approaches...
It depends upon the reactive output / input characteristics of your equipment, & how they interact with each other & with the cable interface. The only way to know what's REALLY going to happen is to experiment. My own situation: the player doesn't like longer cabling & it doesn't work well through a passive pre either, even with very short cabling. Works great with an active pre, but still wants a short cable. Your equipment is different so YMMV.