Any Home Theater Experts here?

Unless I am mistaken you already have a home theater processor in the Sony. I would not change the sony, your set-up seem fine.

pressuming you're staying in 5.1 channels, and not 6.1/7.1 (lest you add amp and speakers for rear/sides), I'd look at quality over quantity indeed. I'd even sacrifice the newer DPLII/IIx in favor of doing 2.1 channel material for stereo movies and such if needbe.
What you can expect from better pre's is better dynamics, lower noise floor, better channel separation, low level detail, refinement.
I'd start at a minimum of Acurus Act 3 with ABM for a budget. I've a factory upgraded 7.1 Acurus unit with 24/192 DAC's myself that's superb, if rare. Another choice is a used Thule or Cal Audio 2500. Krell HTS is superb and refined for $1200-1500 range used for 5.1, if a tad less dynamic than the suprising little Act 3. Otherwise, considering the Anthem AVM20 or better is a good chioce.
If you have a difficult room setup, where you have problems with getting flat response, I'd consider some of the models with a built in parametric EQ, if you care. It does make a huge difference in a system with wall mounted speakers, and diffucult speaker/seating choices.
Do you need 6.1, DPLIIx, etc? There's lots of other choices out there. Many that won't do much better than what you have now however. The Outlaw 990 probabaly won't sound much stronger than the Sony's preamp section however.
Good luck

I would say dont bother, if you are not serious with movies as you are with music then put your money elsewhere, I truely think it is VERY easy to pull off a good movie experience on the cheap, music is a whole other story though. I replaced an Onkyo reciever with Rotel seperates and some features are nice but door slams and car crashes are pretty easy for a Sony to do just fine. I also use a Sonic Frontiers for 2 channel.
Do you really feel like you are missing anything during movies????? If you hesitate to answer at all then I would leave it alone.
Ofcourse others opinions will vary but I know more then a few guys here with really nice rigs and running recievers for home theater, and these guys could spend the money if they wanted, but movies have visuals, effects, story and charcters to wrap you up in the experience, I just think a Sony can do a well enough job if you are not critical of a movie experience.

Most receivers lack the dynamics, channel separation,signal to noise, and overall low level detail retreival that a good separates piece offeres. That said, for $450 range used, something like the modest Acurus Act 3 offers significantly more potent movie sound than that of the preamp section from a Sony receiver. I've not only owned the 777ES and 9es pre's from Sony, but sold the 777 receiver as well. I know of what I speak. My two cents...

When I only had one rig I replaced my Sonic Frontiers with an EAD Signature with no loss in sound quality for 2 channel plus in balanced mode it used 4 DAC's which is amazing for 2 channel audio if you just have a transport. I still have the EAD signature in my video system and had to spend 4x the price beat it. Make sure the EAD signature has the rowland style faceplate or at an angle. The original 5.1 versions versus the 8000 or 8800 sounds better for 2 channel but lacks Dolby II.

I would not do the ACT 3 as technology has moved on... I would do a Denon 3806 with room correction and keep you current Preamp. The 3806 has HDMI video switching with upconverting so one less thing to cable and deal with. Plus you wouldn't have to buy another amp. There is a audio mic for setup too...