Where do I start!?!

I'm not sure why you think selling off something will require him to buy some "Junk" Elizabeth. regardless of the prices involved, as that's irrelevant as all used equipment has taken the depreciation hit. 

Who's to say he can't trade in his mono blocks for another lower powered stereo amp and preamp (with a phono section) from McIntosh or a top shelf integrated with similar sound quality.  

Also that trade in money would go a long way to optimizing his whole system and room treatments. 

you have some good points though about trying it first and if that's a possibility go for it. 

in the end he will have to spend money to get the system working up to par with room treatments and a proper preamp with phono stage of similar quality (or what's the point). lets not even get into wires-cables-stands and racks etc. 

This is why I feel he's better to trade-sell and start a system approach rather then try to make something work in his room that was designed for a larger space.  

In that small listening room (12×13) I assume you are only doing 2ch (stereo) for listening to music only. If you’re only doing stereo why in the world did you end up with a Denon AV receiver in the first place? Just get a very good quality stereo integrated amp and a pair of standmount (bookshelf) speakers on stands.

Your father’s McIntosh MK 1.2 monoblock amps & preamp & massive McIntosh speakers are overkill for your listening room size. Those kind of gears are meant for large listening room. Sell everything all McIntosh gears, your Denon AV receiver & your Monitor Audio Silver speakers and get a high quality stereo integrated amp and good quality pair of standmount (bookshelf) speakers for your small listening room. That’s all you will need. There are countless options out there.

For that such small listening room I would highly recommend getting a Naim Uniti Nova all-in-one box solution. It is a digital music streamer/DAC/integrated amp all in a single chassis. equipped with built-in Tidal lossless music streaming app but no built-in phonostage. It will be best to acquire a very good external standalone dedicated phonostage pre for a turntable. The Naim Uniti Nova retails for $7500 brand new. Naim also makes a dedicated phonostage pre and you can connect an external phonostage pre to the Naim Uniti Nova’s linestage analog inputs. The Naim Uniti Nova integrated is a highly musical sounding integrated amp/streamer/DAC unit. It has various digital inputs and analog inputs (XLR & RCA) & DIN (Naim’s proprietary connection). You can stream Tidal directly and download digital music files. I highly recommend getting a Naim Uniti Core dedicated music server to store all your digital music libraries as it would make a big difference sonically rather than using a NAS or central server or your computer to store your digital music files as NAS or your computer are inherently noisy. And connect the Naim Uniti Core music server to the Naim Uniti Nova. 
I highly recommend the Naim Uniti Nova! It is compact in size and sounding highly musical. Its onboard streamer/DAC is superb. 

For a pair of standmount speakers I recommend PMC or Focal Sopra 1 or B&W 805 D3 or ProAc or ATC or Sonus Faber Olympica l standmount or Audio Physics to pair with the Naim Uniti Nova.
PMC, newer Focal, B&W, ProAc, ATC, Audio Physics, Magico speakers will pair really well with Naim electronics and would have great sonic synergy together.

For my bedroom setup I personally have the Naim Uniti Nova paired with PMC standmount (bookshelf) speakers. Sonically it is perfect match made in heaven. They have great perfect synergy together. Prior to PMC, I had the Uniti Nova paired with Sonus Faber Olympica l standmount as well as B&W 805 D3 standmount. They also sounded great together.

I wouldn't sell it, if for no reason other than family harmony.  And you owe your FIL one BIG Christmas gift this year!!! Enjoy what you have, and invite your friends over. ;-)

Don't even consider selling any of that stuff! What a lucky soul you are....
and do consider the Schiit Freya, would likely be a beautiful match. Or a used Bryston pre. Better yet, a used Musical Design pre (if you can find one).