Yes, no HD codec processing via 1.3 - true.
Another strong point is you're very likely (depending on room, setup, and acoustical factors) going to have to live with peaky lower fidelity sound, that will likely have you diving for the volume control durring loud/peaks in passages, and then going up on the volume during quiet dialog and average sounds, if you lack better EQ technology in the chain. The benefit of the technologies that do room EQ is that they can help flatten your sound, to greatly avoid these issues! My 20 years experience suggests this point is a huge benefit toward building audiophile grade accurate sound reproduction.
In fact, I once did a system for a guy with higher end monitors and amplification, who had a Rotel 5.1 pre in his system, untill I showed him his measurements at key frequencies with his setup. When I substituted a modest processor with a Parametric EQ built in, he unanmously was in favor of the overall sound with the otherwise cheaper pre for his remaining budget allocation. He sold the THX Rotel.
When you take into consideration that the average, even larger sized rooms will leave you with 20db+ peaks and holes in critical frequency response ranges often, having a well EQ'd system (Audyssey?!) is priceless. In fact, I wouldn't go without a better EQ anymore, almost without exception (exception: highly acoustically engineered, meticulously setup systems/rooms). And I say this having used the likes of Krell HTS 5.1, upgraded Acurus ACT 3 (stage one status), Mac MX130, Aragon Soundstage 5.1, and similar in my processor collection over the years. So, I like great fidelity myself.
Considering all that, I'd much rather see you with something like a mid level more current AV receiver, using them as a pre-pro, via the pre-out's - before considering the otherwise good sounding Outlaws, Parasounds, Rotels, even older Krells (much better fundamental fidelity).
You should consider all factors before chosing. Fundamentallly, good pre-pro's offer some better core sonics than a receiver's preamp section. Still, technology keeps upping the ante, with better DAC's, construction, video processing, DSP room correction (invaluable), and more! And some of these receivers are pretty clean as pre's, to boot. Not to shabby.
If I had to say some area's that separates pre-pro's have typically outperformed their receiver counterparts in the pre section, it would be dynamics, noise floor(and thus potential perceived detail with quite room), channel separation, and overall refinement of sound, often. Still, some receivers, I've found, do very well as pre's also - all things considered.
I guess I'm saying I recommend against the cheaper, older 5.1 pre's for you. Rather see you in something like used Harmon Kardon AVR-354 or 254 as pre's, Denon Entry's, or similar, with all the latest - with the price range you're looking. But, nice thing is you can simply buy something and either return it or sell it if you're not happy. Makes comparing products easy in todays market. Then you'll know
