Diminishing returns?

Save you the trouble: you can never get the best out of anything. No matter what you do, something can always be better. Any speaker however good or bad you will hear improvement with a better amp. Any amp, however good or bad, same thing. Including even AVR which you are right to wonder about that.  

Diminishing returns are another fallacy. Except in the case of channels. From mono to stereo, huge returns! From stereo to add a center, nada. Nothing. Stereo already has a good center image. From stereo to surrounds, worse than nada, the processor ruins the stereo quality.  

One simple decision- to go stereo instead of multi-channel- frees up so much money you can afford much, much higher quality. Vastly higher quality. As in no comparison higher quality. 

Run the HDMI direct from your video source to your video monitor. Run your video sound direct from your source to your stereo integrated amp. Thank me later, when you hear how freaking awesome this is.

+1 millercarbon: a good or better two- channel stereo system always beats multi-channel! All those extra sound sources (speakers) just cause confusion! Let the rock throwing by the HT crowd begin!

Buy the best floor-standers you can afford and keep the Denon. Later add a good stereo amp and use the Denon as a preamp. No need to junk it!

soix is correct about being able to hear mass-market receivers vs good audio gear. My bad. I was thinking of all the higher end audio comparisons I've done over the years. That can be work to differentiate above certain levels of good quality. SVS is a good call on speakers as well as subs.

A lot of other interesting and fun suggestions. Since this system appears to need to do double duty, and since the picture implies two people watching, it means two people hearing, so each gets a center image that is either far left or far right depending on seating. Does not sound like fun to me.  (Of course, the OP and sig O could sit audio style, one in front of the other in wood chairs...)  Losing your HT center image is my gripe with telling them to ditch HT.

"....to go stereo instead of multi-channel- frees up so much money you can afford much, much higher quality. Vastly higher quality. As in no comparison higher quality..."

Quality not quantity.