Help a guy out? Renovating home theater system after 10 years and have a few questions.

We also have a Panasonic plasma screen but I have decided not to upgrade for the time being. I had a look at many modern 4K screens and felt that the ones that I saw were pretty gross with too bright colours. But that may be the way they were presented to impress in store. For me the clinching argument is that there is virtually no source material to watch. Broadcast TV here in the Netherlands is not even full HD, and the number of UHD disc is tiny, and even fewer of them are serious art films. I know Netflix does some (compressed) 4K streaming but I have never found anything other than commercial drivel. So on the TV side I am postponing an upgrade. My plasma screen should have at least another few years of life in it (I hope).
On the audio side I have long ago decided that I prefer a high end stereo system for my HT sound (Quad 2805 speakers with a B&W PV1d sub plus Antimode 8033 room eq). For the same budget and the same domestic space I think I get better sound that way, although admittedly I am missing some of the special effects. But that is my choice, and your preferences may be different, of course.

Makes complete sense. We get enough HD content in Seattle to make it worthwhile I hope. My problem is that I am so out of touch with developments that a likely to make a mistake.  Interesting thought for stereo with home theater. My boys love the sound of things flying overheard.

To be precise:
We get what is called HD ready i.e. 1280×720p broadcast/cable television. Full HD as in Bluray discs is 1920×1080p. UHD/4k is 3840x2160 pixels. Do you have significant UHD content, or just HD? If the latter, it is not yet worthwhile to upgrade, I would argue.

The only downside of the receiver is that it is old fashioned and does not support UHD video and some modern formats. So as long as you do not upgrade the screen to UHD it should be fine, however.
Good modern AV receivers are not particularly expensive compared to the cost of good speakers, but make sure that if you decide to get a new receiver it has plenty of power (the more the better), also with all channels driven. That puts a big demand on the receiver's power supply, which happens to be the most expensive part of the unit.
The weakest part of the audio side of your set up is not the receiver but the speakers. I can well imagine that you feel the sound is not big enough, let alone good enough. Unfortunately speakers are also by far the most expensive part of a system.
The biggest impact on the size of the sound in HT would be to replace the subwoofer with at least two modern ones. See here for why you need multiple subs: http://www.acousticfrontiers.com/20101029using-multiple-subwoofers-to-improve-bass-the-welti-devanti...
Brands to consider would be SVS or Rythmik, but there are other good ones as well, particularly at a bigger budget. One interesting option would be the Audiokinesis Swarm system: http://www.theabsolutesound.com/articles/audiokinesis-swarm-subwoofer-system/
In all cases I would suggest a dsp room equalization system as well, either one that is built into the receiver, or an external one such as the DSpeaker Antimode 8033.

Vasubandu I would start with a reciever from Anthem. The same company that makes your speakers. I am using a 58 inch Samsung plasma still since 2010. I was reading an article in Widescreen Review from Joe Kane about the UHD 4K displays, and the manufacturers are still using different standards. I would strongly advise you to wait a little longer on the display. The content is not there yet either. I have gone crazy on the audio end and got an Anthem P5 Statement to drive my large mains and surround rears. I built a center channel to match since the factory no longer exists. All the same drivers and crossovers. Tweeters and midrange all at ear level in the same plane. Using 2 Nikko Alpha 440s to drive smaller height speakers for Atmos. My large speakers are ADS L1290/2s and small speakers 4 of them are ADS L300s. I am using 1 HSU sub VTF-MK4. All my stuff was used and I purchased the speakers on Ebay and Craigslist. I had them all rebuilt by Rich So. The P5 I got used for half price of a new one. I bought the subwoofer online and had it shipped from the factory by UPS. I had the 2 Nikkos rebuilt as well. I bought an Anthem AVM 60 new at the dealer where I got the used P5. I have been into audio all my life since a teenager, now 61 yrs old so I know my way around setup and calibration. Even with yrs of experience when I ran the room correction ARC, that was in the preamp the sound was vastly improved. I used to use Spears and Munsil 2nd edition disc to calibrate the sound with a sound pressure level meter but the ARC system with the calibrated mic is much more accurate. Get one of Anthems recievers and you will be very happy. Get as much power as you can afford. Go slow as the budget allows but get good quality and it will last decades.