$7000 preamp vs $700 receiver - Is the difference THAT significant?

Day and night better.

I've picked a bunch of $4/lb 4 year cheddar that blows out your brie. Besides I prefer Camembert in France. 

Why not just buy a used Mac for 3K instead of 7K

You have an AVR. Any AVR, does not matter. Could have one ten times the cost. Does not matter. Compare it to any good integrated amp. Don't have to go to separates. Not even. Don't have to go to the very best integrateds either. Throw a dart, pick one, any one. Even if it costs less than your AVR. Won't matter. Will be head and shoulders better.  

This is not just talk. I looked and looked and looked trying to find a decent receiver. There are none. Every one I brought home was embarrassed by even a decades old Kenwood solid state integrated. Embarrassed. Like my wife said, you are not paying more money for worse sound. My wife. Wasted a year of my life looking for a good receiver. Give it up. There are none.

You ask about separates. Are they worth the money? Not really. Not unless you have lots and lots of money. When you start looking at separates you can indeed go much further that way. But only if you are willing to match them up with equally expensive and high quality interconnects and power cords. So what happens is you reach a higher level than with an integrated, but spend 3 to 5 times the money to get only a little bit better. 

I know because I tried this way too. Fortunately did not waste anywhere near the time and money I did on receivers. Guess you could say I learned from experience.

As you can learn from mine. Or not. Your call. Choose wisely.

@tlinkie yes, I'm acutely aware of the used market.  I just wanted to have the discussion about an (in my world) "expensive" preamp, vs a (in my world) "inexpensive" AVR playing the role of preamp.

@millercarbon You are talking about the path that I intend to walk in the near future.  A Mac preamp, then followed by a Mac amp, etc... But the question here is: "Is that Mac Preamp going to significantly improve my world today, over that AVR (playing the role of a preamp with that Peachtree)"

@fuzztone I live in Wisconsin, USA.  We love our aged cheddar.

@ebm That simple eh?