home theater processor suggestions?

The Anthem MRX line delivers much of the performance of their dedicated processors at a much lower price point. I use the MRX300 as a pre/pro. No XLR though. Great piece for $1k.

Would the sound be a step up from what i am running now?

Baranowski,

Anthem, Marantz, and Integra are the likely units for you to narrow down to. The Anthem out of the box has the best room correction. The Integra will be on par if you upgrade to Audyssey pro. Marantz has the older Audyssey. I haven't seen reviews or heard the emotiva to comment. I use an a-100 emotiva amp for my zone2 audio. It's just fine but no experience other than that. I have had Anthem pre-pros for years and I love the 2-channel and multichannel capabilities. Kal has reviewed both the Anthem and Integra in Stereophile and Michael Fremmer has reviewed the Marantz. All get high marks for audio. My hunch tells me that the Anthem (i admit my bias) and then the Integra are probably a class above, but I haven't heard the Integra or Marantz to be able to tell you definitively either way.

Besides the xlr connection what will i be gaining?
what exactly does the xlr provide over rca connections?

The balanced/XLR connection is great at noise rejection. If you are doing longer runs, balanced connections are the way to go. If you have very short runs from your processor to the amp, then you will be just fine with RCA (unbalanced) runs. Picking up noise on the cables depends on a number of factors including where you live.

From all the posts, it sounds like you're planning a big upgrade to your system.