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get a nice tubed pre - for the money, it's the most cost-effective way to get good digital sound. a great pre & a $500 cd player will beat a great cd player run straight-in, everyday, imho, even if the cd-player was designed to be run straight-in. of course, the great cd-player may be better than the $500 unit, when run thru the pre, but it's yust not cost-effective - yule get very little improvement. besides, why dump a lot of money into a digital format now - who knows what the record companies will be making in a year from now? and, a great preamp should improve *all* your sources...
ps - if ya want to keep the h-t processor, there are many pre's w/a default processor loop that allows the processor to control *all* the speakers, when in h-t mode; when listening to audio-only, the h-t electronics are not in the signal-path...
Everything starts in thr source "garbage in - garbage out". The SACD will bring you into enrirely different world. Much much better then vinil, better then DVD-AUDIO, second only to real-life event. I owned 777ES and now own 9000ES. The later one is cheaper (I paid $1,075) but its midrange is much better. Bass also better, highs are worse because in 777ES you could remove easily low-pass 50kHz filter. In this one I am investigating how to do it. When it will be done, by defoult, in my system, highs will shine. In addition, you have DVD so you can watch, if you like to watch... You can listen to 24/96 DVD two channel music (e.g. Chesky, Classical Records etc). Finally, CDs also sound great very similat to best tube pre/power amp combination, and I am "toobe man". Good Luck!
I really have to agree with doug. The B&K processor is bringing you down. I used to have a B&K PT-3 that is based upon the same pre-amp as your processor. Had Pertetual Technologies DAC & Anti-jitter box running into the B&K and then into my Aragon amp driving Hales Revelations. I ordered a relatively inexpensive tubed pre-amp and it was the biggest upgrade I've experienced. Just incredible differnce. The pre-amp is a AES AE-3 but I think you could use any number of good two channel pre-amps and get good results. As far as upgrading your CD player I would look at Bel Canto, Perpetual Technologies or an EVS DAC using your current player as a transport. Get the pre-amp first though or you will never hear how good a great DAC can sound. If you go with the EVS DAC you might be able to use a stepped attenuator instead of dropping cash on a pre-amp. I prefer an active pre-amp but opinions differ.
Have to agree that the processor is the weak link - a good preamp will take you to the next level. I have Nautilus 805, Bryston 3bst, and by far the biggest upgrade was going from an Arcam integrated amp (used as preamp) to a Bryston BP20 - totally different league. Not sure what your budget is but worth considering Quicksilver and Rogue preamps if you want to spend less than 1k, and Blue Circle and BAT if you can spend more (IMHO). I tried CD upgrades to Bel Canto DAC1 and MSB Link DAC III and was unimpressed. That said, if you really want the front end upgrade, the Sony 9000ES may be another worthy upgrade seeing as you your set up is geared toward home theatre.