Preamp - Processor for 2 channel music

If priority is 2 channel, I'd invest in a good stereo pre and use a decent AVR to handle the multichannel duties.  And definitely upgrade the amp to a good stereo amp that compliments your stereo pre.  Your speakers are too good for mediocre upstream components.  Send the front L/R outputs from the AVR to extra inputs on the stereo pre, and yiu have the best of both worlds.  Best of luck. 

Jl35, I went through the same process a few years ago. I downsized from a 5.2 to 2.2 system since most of my system use was audio. To add to auxinput's recommnedations, I would add the McIntosh MX-120 or 121. These units fall into a grey area where audio purists won't touch them (because evil tone controls), and hard core AV guys skip over them because they don't utilize the latest Codecs. They will run in analog mode and offer up a ton of flexibility in addtion to producing stellar sound. In the Mc pre amp world, they represent an amazing bargain.

Downsides? You have to run an S-video cable to your television (at least on the MX-120) to access the onscreen menu.  There are s-video to hdmi converters available.

I've owned Classe SSP-25, Cal Audio Labs SSP-2500, Citation 7.1, Theta Digital casanova, Krell HTS7.1 and the Krell HTS7.1 is the most musical HT processor, especially in 2-chan stereo.  It achieves 90% of my Krell KCT pre-amp.

The Parasound Halo Integrated or Ayre AX-5 Twenty integrated might be a simple solution that would pair well with your Aerial 7Bs.  You might be able to find either used at a price substantially below MSRP.

db

Take a serious look at Marantz AV8801. The analog section is very good