Thank you for all of the information. Yes, my question was really if the AVP or AVP2 could get the 5.1 LPCM data and do something with it. I now know the answer is nope - 5.1 LPCM is newer than the AVP/AVP2 DAC can handle. Fair enough.
And yes, I was considering moving away from my Rotel in favor for a AVP2 - I do not currently own an AVP/AVP2.
I am a big Proceed fan and have the following in my system:
CDD, PDP, PRE, AMP2, AMP3 in addition to the Rotel RSP-1069. I run the front channel pre-outs from the 1069 to the SSP pass-through on the PRE. This way I have a pure 2-channel solution and HT all together.
My interest in the AVP(1998)/AVP2(2001) was that the DAC's are much newer than my PDP(1990) and they are going relatively inexpensive on eBay. The idea was to sell the PDP and PRE and replace with an AVP/AVP2 for almost a wash. But the sticking point is integrating home theater into the picture - aka, the AVP/AVP2 would not have a SSP pass-through like the PRE. So then the question in my head became could the AVP2 replace the 1069. If I give up the Dolby HD/DTS-MA feature, than the answer is yes. I would need to buy a HDMI switcher. There is a cool Octava unit which will send the audio from the HDMI to an optical out.
My budget will not allow me to get something amazing like the Arcam AV888.
I'm not unhappy with what I have, it's just that little voice in my head that wonders how much better could it be...
"Hi my name is Tim and I'm an audioholic..." (no offense intended)