Harshness in Midrange??? Any Help

What is your room acoustics like?

What listening level are you using?

Is it only certain recordings?

I very much doubt there is anything wrong with your system. Alan Parsons uses your speakers (Pink Floyd fame). The rest of you gear is pretty much accurate at audio reproduction. If it sounds harsh then it probably is - it may just be the source!

What were you using before as system/speakers - what is your reference to say some recordings are harsh (The majority of speakers are voiced to be recessed in the upper mid range to avoid this issue...it is called the "BBC dip" - it may be why you think it sounds harsh compared to other consumer hi-fi you have heard)?

You can remove harshness with a PEQ by applying a slight dip at 4Khz.

How old are the tubes in the ARC?

Room treatment thats the ticket. Your gear is fine and I would think before you put the blame there try working with the room. I would say once you have treated the room properly or at least got it under control,then and only then would gear change be in order.

Possibly the LS16 which had a glaring upper mid and rolled off bass in my system(and every system I heard it in) coupled with B&W speakers which can be a little strident. Room treatment could help somewhat.

Normally i would address the room first and foremost..But IMHO its the ARC Ls-16 and low cost Kimber's not doing you any favors. This is a very neutral, but near sterile sounding pre amp. Your 802D's are very good paired with the right amp..Not bright at all, as the previous 802N could tend to be... and the Levinson is rather laid back/dark sounding..Id change out the pre amp to something more tube (lush) and the cables as well. Treat the room for sure regardless..