Improvement over 2002 Denon AVR-3802 for 2 Channel Music System

Wow, you sound like me about 3 years ago. I had a highly rated Denon AVR which I switched from using as surround-sound, which sounded fine, to use as a two channel. It was awful. I had several very good two channel systems in the past, and the Denon was the pits. I saved up and went with a Luxman integrated. They have lots of choices. There are many other great integrated amps, but for me the Luxman had all the right features and sound. And I wanted great sound but didn’t want to get into total separates or tubes. Amazing difference, just lovely.

Many new integrated amps have built in DACs now, I would suggest to go with separates for a DAC, they really do sound very different.

Hope this helps. By the way, I've been in IT since 1993, just retired. So I know what you mean. 

My quandary is, what will I really gain here with a new amp?

That’ll get you halfway there, but as long as the Denon’s preamp section is in the signal chain it’ll be a significant bottleneck to much better sound.  Not sure why you’re against an integrated as they can be a great value vs. separates, and for $3k you could get a very nice integrated and just be done rather than then having to search out a preamp that synergizes well with an amp.  Just a thought, and best of luck. 

Black Ice Audio has a product that is designed for rooms like yours that can't be treated in the conventional way. I would start by checking out their preamp:

Thanks, to all.  The Black Ice stuff looks nice.  I am not big on processing the signal though.  I can only think of aural enhancers like the 'ol BBE Sonic Maximizer...  Not my bag. I realize that this is an antiquated example, but every time I have heard something that purports to fix audio issues using an algorithm or some sort of processing, I am skeptical.  

My Denon, being a 2002 has a MUCH better power section than the AV receivers of today (IMHO).  Anecdotally, I know this as I replaced the 3802 with a 2018 AVR-3500h in my Home Theater system.  The 3500 is ok, but does not have the "authority" that the 3802 had.  Especially with 2 channel content.  TI do know that maybe a more fair comparison would be a 6500 series or something.  But the 3500 was at a similar relative price point to what I paid for the 3802.  That said, the 3802 is getting old.  Also, to many of your points, the Pre in it was never "audiophile grade", but built mostly for AV use.  Totally get that I need to replace it.

To answer some of the above questions, I like separates for serviceability and signal isolation.  I like the idea of "older school" design in most of the components as I do NOT want to be upgrading an entire integrated amp each time technology changes.  I'd much rather have an outboard DAC and Streamer that I can swap out at much less expense and keep the pre and power sections.  Another reason - Budget / Cashflow.  I can better rationalize getting a Power Amp for $2-3k now, a pre for $ 2k 6 months or a year down the road, and then a better phono stage for $1-2k in 18 or 24 months, rather than spending $6-7k all at once.  Replacing my existing components bit-by-bit.  Just a process that makes sense to me.