I want to change from 2 channel to HT but what....


I have a very good Karan KAi180 integrated amp, a diy cd player and Merlin VSM-m speakers. I would like to sell the Karan and purchase a used or new HT receiver or separates. I want to spend around $2500.00 (the used price of my Karan). I am looking at, in this order, B&K 507, Sunfire receiver or separates like the Lexicon MC-1 with a good amp. I have also read some good info on Yamaha, Denon and a new Samsung digital receiver. I have also read that Sony has a digital amp in a receiver as well. The Samsung is out of my price. My plans for the near future is to buy a new Panasonic 50" plasma. I would like the hdmi switching, 7.1 and THX Ultra. I don't think the B&K 507 or the Sunfire has these. I am not realy keen on Sony, Yamaha, Denon, Onkyo or Samsung etc. receivers for the only reason that I would not buy one for a 2 channel set-up, but I am willing to consider everything. I do want at least 170wpc, THX Ultra, DTS, DD, 7.1 and a good video switch hopefully with HDMI. I do believe a good receiver can sound as good as separates. Mybe not in my $2500.00 price range. My Karan integrated was an upgrade from $7500 Melos separates.
stereo
If you want HDMI switching, currently the pickings are quite slim whether you are talking receivers OR surround processors. At this time, I believe only the Denon 5805 has HDMI switching and that is out of your price range.

If you can forgo inboard HDMI switching, I would recommend something like a used Anthem AVM20.
The AVM20 here on Audiogon asking price is $1700.00. I took a quick look for used 7 channel amps and nothing under $1600.00. I want to stay around $2500.00 but not go over $3000.00. Maybe the AVM20 is only five channel, I don't know. Two of you mentioned Anthem, but neither said why.
I researched on the internet and found comparisons between the Denon 5805 and the B&K 507 and the reviewers chose the 507. I don't need HDMI, just good sound with some power.
I just spoke to a local retailer and he said Arcam AVR300. The only drawback is the 100wpc, but he also deals B&K and said the power ratings don't mean much the Arcam sounds just as loud as the 507.
I'm awaiting on my Arcam AVR300. From what I understand, it will put out a true 120wpc into two channels. Also, you can biamp it if you use it in a 5.1 setup (two extra channels left). I haven't heard it yet but from the reviews it sounds like the holy grail of receivers in terms of two channel playback. I'm no mega audiophile but if it can at least compete with separates in the $3K and under range, I'll be happy. I've also read that the Rotel and B&K offerings are excellent as well. I passed on a B&K 507v1 for $1550 for my AVR300 @ $1600. I told my wife that the Arcam matches better so let's spend the extra $50. LOL, (my stuff is silver, the AVR300 is silver and the B&K was black).

Scott
I just put together a system for my son using a Proceed AVP2 and a Marantz 5 channel 9000 . Sounds great , the Proceed is extremely intuitive for menus and set-up and the Marantz runs 150 per channel. The total investment buying preowned was about 1700. Check Audioreview.com for users opinions.
Another consideration is the Outlaw separates, great value for the bucks and certainly within financial parameters.
It's a dotcom buy direct company and their service is outstanding.
Good luck and welcome to 5 channel
Why 7.1? You can't get any decent source material in 7.1, so why bother?
Why is Anthem recommended - because it's excellent bang for the buck. So is Sunfire, but it suffers from the successful (large) company = not-in-our-club attitude that prevails here. The sunfire Theater preamp in III configuration with an Anthem MCA-50 should be under $3,000 and a nice set-up. an Anthem MCA-5 or 50 can be had for about $1,000 - I still have my MCA-5 doing rear / center duties in my system, and it's the component that's lasted longest in my system.
If you're reaaly thinking about a receiver buy it used as they drop like rocks - buy someone elses mistake.
I wouldn't bother with HDMI switching either, as the frequencies video works at is bound to be adversly affected by a switching mechanism - be sure to get at least two HDMI inputs though, as very soon you'll need that for the cable and DVD inputs.