Am I deaf?

Yup...junk the Classe. Wanna solve the problem on the cheap? I recommend the Audio Refinement Complete Integrated. Phenomenal 50w/ch SMOOTH piece. Their CD is mighty nice for the bucks, too. Both pieces are a LITTLE rolled off up top. Re: passive dynamics...it's all about whether your front end can drive your amp, isn't it? If there's insufficient drive there'll be less dynamic headroom. If there IS sufficient gusto the advantages are multifold.

I beg to differ slightly Subaruguru. CD players usually have no particular trouble driving a passive, it is the output of the passive driving the amp that is the problem (if there is one). This means a ladder attenuator is best in the passive as it gives the best result for output impedence across the volume range (as opposed to a series attenuator which has an output impedence that varies with volume). But most importantly it means you need an amp that is easy to drive, short cables between passive and amp, and those same cables have to be very very good, else their electrical characteristics have a more than usual impact on the shape of the sound.

No you are not deaf. If they sound nearly the same, then go with the lowest cost/best value product. New equipment is not always the solutions. It your system sounds good to you -- enjoy it and stop worrying. However, if you insist upon obsessing, yes your amp is the "weak" link. However, any reasonable cost (under $1,500) change will not dramatically improve the sound of your system. The improvements will be subtle. Maybe they'll be musically important, maybe they won't. TRUST YOUR EARS.

WOW! Using a better pre-amp has made a fundamental difference is my system. I would have never guessed that a pre-amp could make such a dramatic improvement in sound. (Especially considering that the Classe integrated was rated Stereophile Class A.) I guess I'm not deaf after all. Thank you all so much for your advice.

Glad to hear your happy with your set up. Have fun.