Getting great stereo sound from multi channel sys.

Agree with others on option 1. Personally I'd get a good stereo pre and amp and a decent AVR (I've read budget Yamahas do relatively well for audio) to handle processing and powering center/surrounds so you can put the most money where it matters most. As Paraneer mentioned, a good integrated could work too if space is a concern and may save a little $$$. Best of luck.

I bought the Audio Refinement Multi 3 three channel power amp and a matched Multi 2 two channel power amp (both used) to go with my Rega Osiris integrated amp (primary for 2 channel audio) . The Rega integrated has a full signal bypass for hookup as the LF and RF channels in a multichannel setup with the AV pre-proc below.

These Audio Refinement power amps are the YBA designed (France ) with the hi-end YBA parts but assembled as French designed units in China as YBA's Lower priced kit. I bought them used within the last year for about $450 each (each was pushing $3000 new).

For the AV preamp processor I went with the all digital NuForce AV18 preamplifier / processor) . Multichannel favours HDMI and this unit forgoes all the legacy inputs in favour of all digital. Google for reviews - highly recommended AV pre-pro separate.

With the subwoofer and 7 speakers, (mains were the LF and RF) I now had my discrete 2 channel primary audio 2channel rig integrated as part of the 7.1 multi channel system. For two channel serious audio enjoyment, it is only the standalone 2 channel system, but with a flick of the button it integrates into the Multi channel system when I need it.

I had the expensive top-end Cambridge AVR before. As good as it is, it does not compete with this and many other similar hi-end separate components systems.

IMO, you need to answer an important question (or two or three) before you choose from your options:

Do you plan to use your subwoofer(s) for stereo listening?

If you do plan to use them, Option 1 may not be your best choice. IME, AVRs and Pre-Pros will likely get you substantially better subwoofer integration than you'll achieve with a traditional stereo preamp. "Likely" is the key word there, as absolutes are risky, but the bass management systems in pre-pros and AVRs really do this job well.

A second question runs to source material. If your music is strictly digital, the trade-offs of DSP are IMO pretty beneficial. Not everyone here will agree, but IMO crossing in the digital domain and room correction schemes like Audyssey are simply a better mousetrap. If you use mainly LPs or other analog sources, the decision is more complicated. If you're amenable to subjecting your analog signal to processing in the digital domain, you may still prefer options 2 or 3. If that idea troubles you, I'd agree that Option 1 is best.

As to Option 2 vs Option 3, good AVRs are probably better value, but a pre-pro and separate amps may be preferable, particularly if your main speakers present a difficult load to an amp (provided that your budget allows).

"If you do plan to use them, Option 1 may not be your best choice. IME, AVRs and Pre-Pros will likely get you substantially better subwoofer integration than you'll achieve with a traditional stereo preamp. "Likely" is the key word there, as absolutes are risky, but the bass management systems in pre-pros and AVRs really do this job well."

The OP's preference is pretty strong for 2 channel. Going with theater gear just to integrate a sub probably wouldn't be worth it for the hit you will most certainly take in overall SQ. It may be a little more work, but you can get a sub working well without all the processing. For a system like this, a sub made for music would probably be a better choice. Or maybe just use the sub for theater only.

Thanks for all of your help! Any model recommendations for integrateds or preamps with HT bypasses?