Moving From AVR to Amp


Relative newbie here so please excuse my lack of knowledge. I am assembling a system for HT and music (70/30 respectively). My room is 29x12, viewing/listening position is about 8-10 feet from the front speakers. I started a couple of years ago with Totem Forests, Model 1 center and Lynks rears, Velo SPL-1500R sub. in a 5.1 set up. I have been using an Onkyo TX-SR805 and a Squeezebox just to start while I gradually build my system. I recently added a media center PC built by a friend, that I use mainly for streaming movies and as a blu-ray player. I am thinking of (1) adding a separate multichannel amp (either 5 or 7 channel) and using the AVR as a pre/pro for a while, (2) getting a good stand alone DVD/CD player now, and then adding separate components in the next year or two. I am budgeting roughly $3,000-$4,000 (including interconnects) in this phase of the upgrade. Used but well cared for equipment is fine with me to maximize the value of my system. My questions, before I go listening/shopping: Is this a reasonable way to upgrade? Would I be better off selling the AVR and starting from scratch? What amps should I consider? Is it better to get a 5 channel amp for now and add a separate amp if I go to a 7.1 set up later? Sorry for the long post, but there seems to be alot of info to sort through and I am trying to learn.
theclam
for digital audio the DAC is the most important component. Check the forums here, it's where your sound will eminate from.
personally, i'd (at least initially) keep the onkyo and your very good existing speaker config and get a three channel amp to power the fronts and center--perhaps something like a parasound or wyred4sound--i think you find signicancant improvement + save some $$. you can always change out pre/pro and/or add an additional amp later.
I also started with a Marantz AVR, moved to B&K Surround Processor plus a Gemstone 7-ch amp, and finally added a set of 2-ch gear. I have the same Velo SPL-1500R subwoofer. I concluded that I couldn't be happy with muti-channel gear for 2-ch music.

If I had to do it all over again, I would have just kept the AVR and added the 2-ch gear as the L/R channels since I cannot have dedicated rooms for HT and 2ch music. I am a music lover and I also like movies. I found most sound comes from the L/C/R channels for HT. If you off load the L/R channels to the 2-ch gear, the AVR is likely to be sufficient. Additionally, the Velo sub is 1,000W RMS (2,000W peak!), further reducing the demand to the AVR.

A key in this integrated HT/2CH is isolating the noises from the HT gear to the 2-ch gear. But that is another subject.
This is extremely helpful, thank you everyone. I think I'm leaning toward the 2 channel amp for the front L-R. Will HT suffer if the AVR powers the center and rears? Would a 3 channel amp solve this or would I again be sacrificing quality by moving to a multichannel amp? If I go the 2 ch route for now, do you have any suggestions for amps I should listen to? I see other posters recommending Simaudio and Plinius with the Forests but both seem rare on the used market and a bit pricey.

CK: your method sounds thorough and as far as buying used gear and re-selling, I do exactly that with photo gear but lenses are a lot easier to pack up and ship than 100 lb amps! I'm not sure I have that level of commitment (but that could change). I am in the NYC area and will look around for dealers who carry Totem to see what amps I can listen to. My strong preference is to buy used or demo gear.
Theclam, I hear you on the lenses (I am a Canon guy - love Fred Miranda site for swapping photo stuff). Amps aren't that bad to ship (like speakers for example). I think both SA and Plinius go well with Totem. But I would check some of the Totem threads for more ideas and what types of performance the different amps will produce.

Personally, I would keep the Onkyo and do as you suggest in the post above. I would even consider a BAT pre (with HT pass through) and a BAT SS amp. I think you may be able to get both together for well under your originally posted budget and suspect you will still be very happy with the results. FYI - I am down to just using a Yamaha AVR for my HT needs and to be honest am fine with it. I had in the past tens of thousands of dollars in HT amps, prepros and speakers. Yeah, its not that good by any means, but I am not that much into movies and I find my current system perfectly satisfying for me. Two channel is where my money goes now.