Amp using a receiver as a pre or integrated?

I have a pair of Dynaudio 1.8 MK II's that I bought prior to the arrival of our baby boy. My wife has become a stay home mom, which has limited my potential for amplification upgrades.
I currently have a Denon AVR-85 that isn't designed to handle the 4 ohm loads of the Danes, but I could use the pre-outs and hook up an amplifier (e.g., Linn LK85), or I could tie in an integrated to the system (e.g., Audio Refinement Complete or NAD 370). I want to know which would sound better for 2-channel listening. I want to spend less than $700 if possible and will purchase good used equipment.
Room is about 12 x 16 with 8' ceilings. I don't listen loud, so I am looking for quality, not quantity of amplification. I listen to Jazz, classical, classic rock, and southern gospel music.

Any recommendations would be greatly appreciated.
If you don't even need the Denon for surround sound, and you want it under a grand, under seven hundred, you could get a amplifier kit which either of the two top of the line models would cost you less than $500 in parts and from there find a nice preamplifier at a good used price (or build one too) and sell the denon to help fund it all. The designer of the kits, Randy Slone, has a book on amplifier design which is good and full of other "state-of-the-art" designs. (I own a copy). If comparisons are important, on another site, which had a never ending thread on these amps (it went way off topic is why, funny that) one individual built two of his opti-mos kits and said they bettered his $3,500 Naim by far. But that would give you really nice sound for "pennies." The Van Alstine gear is good too, but you'll have to shell out $1,000 for one of their amps (built of course). I've heard Randy Slone is rather friendly so you could drop him a line and he could tell you alot.
I really want to keep the receiver for HT.
Congradulations on the birth of your son. I am quite sure he will make you much happier than an amplifier. I would defer an major purchases or now and invest in a good camcorder and VCR. They grow up so fast you could miss it. Soon enough you will have someone to share your hobby with usually by age 8 they are helpfull and less dangerous around high powered amps. Some helpfull advice ; Keep all your electronics in a closed cabinet, amplifiers need to be kept high off the floor or under the floor like in the basement, wires and cables are run into the walls or floors, and your speakers need to be off the floor or stand mounted secured to the floor. My choice of amp would be a used B&K Reference 4420 . About 700 used or 1200 new. It has both balance and single ended plugs and will grow with your needs and drive your speakers . Hope this helps
Dredster gives good advice in regard to documenting your young charge. For the system I would look for an integrated amp (such as the AR Complete - used - which would be my first pick given the budget). It has little, if any, noticeable grain in the HF's which will show you what the Dyn tweeters are capable of. Avoiding the preamp section of the HT receiver (for two channel listening) will also do wonders, thus the recommendation for a good integrated. Your room is small enough and listening levels moderate enough that the AR should work fine. You will have to make certain that there is a way to patch in the receiver, in a switchable manner, for HT duty. We don't have any kids left @ home but I do have the electronics located in a hall closet (behind the speaker wall of the living room) due to five cats and part of the setup being tubed. I run the speaker cables through the walls as Dredster mentions and supply power to the closet in the same manner via a Monster HTS-2000 power conditioner (approx. $125 discounted on the web). Many rooms have either a closet in them or one running behind a wall and this is a nice arrangement if you can swing it. I could get my remotes to work by adding a relay device available @ Radio Shack for $70 or so, but have not yet bothered as I am not much of a remote person. The favored SS amps with you speakers are by Plinius, Classe and EMC, (per user comments on the web) but these are well above your price range. I own and have listened to other Musical Fidelity SS amps, around your budget, and they fare better with more efficient speakers (they lose PRAT otherwise and become a little boring). Nice amps, but not for your application. Good luck.
Thanks for the responses and the advise on the equipment. I will make sure the room is childproof. I am thankful that the Lord blessed my wife and me with a son after 10 years of marriage. We couldn't be happier.

Dredster, we are in the market for a camcorder, just trying to decide which would be a better purchase, a VHS or digital (we do have a computer).

With regards to the amp, I was thinking strongly about an integrated (the AR complete is high on my list) because I did think that the pre on the integrated would outperform the Denon; however, responses on indicate otherwise. Some commentors suggested that I spend the money on a power amp as the pre of the Denon would be fine. Others suggested that I forget purchasing an amp at all since I listen at low volumes. I tend to agree with Dekay that the integrated would do wonders to my 2-channel, that is why I began looking in the first place. I saw an article in What Hi Fi? that recommended an integrated under the same circumstances and detailed how to set it up (unfortunately I didn't purcase a copy) to get 2-channel through the integrated and still keep the HT.

Anyway, I am a little confused, but I believe that an integrated still would probably provide the best 2-channel listening under my current budget constraints. Right??