Largest Impact - Arm or Cart?

I agree with Jaybo. You already have a $2,000 arm, and Origins are generally considered over-achievers anyway. If you have $1K you *must* spend, I'd say get a nice cartridge. You wouldn't be stretching beyond the Encounter's capabilities by any means.

But if you want to make big tonearm improvements, save your money until you can get a Graham Phantom.

Assuming you sell the M2 (retails around $1300) for $500 and add the pocket burning $1000, you're basically back to the cost of the M2.

Contrary to the other recommendations, you'll need to drop over $1500 plus the proceeds of the M2 to make a significant upgrade which would be the likes of a Zyx Airy 2, Zyx Airy 3, Sumiko Celebration, Lyra Helikon, etc.

The Encounter is hardly an overachiever and sells for $1600+ not $2000.

Check out this thread, in support of the validity of following the turntable upgrade hierarchy ('table, then arm, then cartridge):

Palasr, Salectric, and Doug Deacon were commenting on how good the Denon DL 103R is in the context of riding on a good turntable / tonearm. I think this is worth reviewing.

The relevant comments start at post #31:

http://forum.audiogon.com/cgi-bin/fr.pl?eanlg&1171736594&openfrom&31&4#31

Cheers,
Thom @ Galibier

The arm + cart form a SYSTEM. The most important aspect is how the arm and the cartridge work together. Price is not necessarily the best way to approach this conundrum, either.

Origin Live are indeed, overachievers and give clear performance gain with upgrade. Moving from the Silver Taper, a predecessor to the Encounter, to Illustrious, was instantly better, no equivicatiuon , for me. What they don't have, is efficient, reproducable, VTA and tracking weight adjustement. I am sure this would drive anyone into optimal setup, quite mad. It gives me an excuse not to try and enjoy the music instead.
As Patrickamory says the 2 form a system. All I would add to that is that after 3 years you need a new cartridge or a rebuid, whislst the arm has years left in it.