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.