how should i move forward...blu-ray etc...?

johnnyb thanks, what i was afraid of. i'm pretty sure that is correct. was not sure if the digital input formats would work but i guess not. oh well!
it really is hard for me to imagine things sounding that much better anyway. i have yet to hear movies sound better than they do in my home with the exception of a demo theater room the old store i used to haunt had with all the best gear they had and it was just dolby digital/dts 5.1.
i cannot believe some of the setups guys on here have!! but most of them are still the same old formats too, just monster gear to play through. fortunately, i don't know any of them so i do not have to hear them and come home thinking mine sounds bad.
it is just that damn bug inside that tells me i can get better. then sometimes i wonder if i should just get a damn current receiver, 5 or 7 $1000 speakers, a nice little sub and sell all my gear...AAAAHHHHHHHHHH!!!!

02-09-09: John_z
...Unless I read their website incorrectly, it looked to me like the Casanova has analog ins, "two pair analog L/R, plus one pair rear L/R, a center and sub..." Of course this may have been an optional card which your particular unit lacks.

Where on the Casanova product page does it say that?

Oh I thought he had multi channel inputs I guess I read wrong so sorry if I steared you in wrong direction.

Richard: In response to your most recent post, here's my take on the subject:

You have the state of the art for the previous generation of home theater surround. What surprises me a bit is that Theta didn't include a 5.1 or 7.1 channel analog pass thru. Many receivers and pre/pros included this feature to help "future-proof" their units against new codecs.

Here's what Blu-ray brings to the table:

First of all, the picture. It doesn't matter what whiz-bang video up-converter or $25K Faroudja outboard processor you use, the best that will do is make 480p watchable on a large screen. At its best it may fool you into feeling like you're watching a 35mm print in a theater from 15 rows back.

With even a $300 Blu-ray player feeding a state-of-the art 1080p/24 digital transfer to a 1080p 120Hz HD video display, you will get a picture that exceeds the sharpness and brilliance of just about any movie theater you've ever been in, and will equal the most advanced theater DLP-equipped digital projection systems and even IMAX.

Concerning surround sound, we have been listening to compromised surround channels for so long we've gotten used to it, letting the L-C-R and subwoofer carry the load when it comes to boom and sizzle. In truth, the surround channels don't sound all that real in DD 5.1 and garden variety DTS because they have so much lossy compression.

So how much better is uncompressed surround? About a year ago Wes Philips of Stereophile reported on hearing Dolby TrueHD at a hi-fi show. It was uncompressed surround sound and was powered by an Onkyo A/V receiver. Yet he said that it was the best surround sound he had ever heard. With uncompressed surround channels, the soundfield comes alive. Images, motion, and direction all come alive in a way that the lossy surround simply cannot.

If you upgrade to 1080p and lossless surround, hang onto your Krells and Wilsons; you can't really do better than that. It's unfortunate that the Casanova doesn't have a multi-channel pass-through. Maybe the thing to do is get a 1080p display, a Blu-ray player with internal lossless decoding, and then pick an inexpensive temporary solution for the pre/pro.

I can see taking one of two paths here:

1) You could buy a used or closeout previous generation pre/pro that has the multi-channel pass-through. Because Outlaw Audio is soon going to have an HDMI 1.3a-capable pre/pro, they're blowing out their very excellent 990s at $699, and those have an excellent 7.1 analog pass through.

2) You could buy an Onkyo A/V receiver with full HDMI 1.3a support, one that has 7.1 preamp outputs, use it as a digital surround pre/pro. You can get the Onkyo TX-SR706 from Amazon for $550 shipped, and it does indeed have the 7.1 channel pre-outs so you can use it as a pre/pro to feed your Krells. The next Onkyo model down does not have the pre-outs.

This would be a $500 solution that would hold you until Theta, Lexicon, Esoteric, or one of the other high end big boys comes out with a pre/pro that incorporates all the HDMI 1.3a switching, extracting, and decoding features.

One other alternative: You might call Theta to see if their new Six Shooter, which is a no-compromise 6-channel line level switcher, would work with the Casanova.

johnnyb you really have been a great help along with the rest of you guys. certainly a pleasant welcome to this forum. i never realized such an incredible resource like this existed! i always just used audiogon to buy/sell/browse and lust.

it would be interesting to hear how one of those receivers sounded as a pre pro with not just blu ray but standard dvd and 2 chan audio. i may play around and compare and see if there is a difference...maybe the old casanova has just been out grown...?