1. Get a Lexicon DC-1 THX AC-3 DTS v4 for $1200-$1700 or a DC-2 for $2000-$2500. Logic 7 is a substantial improvement over the stock AC-3/DTS/Prologic decoding algorithms especially if you run both side and rear surround speakers (I really recommend this). The DC-1 was also a pleasant step up from the DACs in my $700 Adcom GCD700 CD player and DC-2/MC-1 owners suggest similar quantum improvements from the DC-1 are possible.
2. Many digital surround sound processors lack an (accessable - you can rig up a switch box on the Lexicons to use the analog zone 2 outputs) analog pass-through; so if you use an external DAC you'll be converting digital to analog to digital to analog.
3. If you have the shelf space, I think stereo amplifiers are a fine idea. On paper, many two-channel amplifiers are biased hotter than their multi-channel brethern and should therefore avoid cross-over distortion.
2. Many digital surround sound processors lack an (accessable - you can rig up a switch box on the Lexicons to use the analog zone 2 outputs) analog pass-through; so if you use an external DAC you'll be converting digital to analog to digital to analog.
3. If you have the shelf space, I think stereo amplifiers are a fine idea. On paper, many two-channel amplifiers are biased hotter than their multi-channel brethern and should therefore avoid cross-over distortion.