Disc player and DAC or just a player?

Guy's I appreciate the assist as this is not a specialty of mine. On the verge of buying a TV and BD player and trolling this forum has me thinking I've been dumb. With HT and Music a 50/50 which scenario is the smart approach:

1)Universal disc player (oppo-83, Cambridge 650BD or ???) straight to my reveiver (pioneer SC-07) via HDMI

1a)or perhaps HDMI- video and analog sound. No idea if this is possible but this assumes that the DAC on a player is better than my receiver.

2) Universal disc player with HDMI to receiver and digital to a external DAC and then the analog to my receiver. Again this assumes that the audio and video can be split up.

Associated with the suggestions is any suggested systems like Oppo bdp83 + V-Dac or whatever.

Never bought a dac or player other than my playstation II!


What is your budget and what components do you already have?
Good catch on the budget, sorry. I really have no specific budget figure but I gotta say that high bang for the buck components like the OPPO for example are valued and I get kind of queasy when $2500 CD players are discussed. Call it $1500ish for the player / DAC if that combo makes sense.

Existing setup is:

PS2 disk player as a digital source. Component to receiver and TOSlink sound to receiver.

Receiver is Pioneer Sc-07 with component vid to old Sony projection TV (this is going away...Samsung 8xxx series perhaps??)Audio outs are analog to Fronts/Center/Rears (era D14/era LCR4/era D4) and line out to JL Audio F112.

I have no specific audio complaints to address but recognize that room for improvement exists at this price point. My big unknown is relative quality of the receiver DAC vs. what is available externally and if a player can send hdmi video to reveiver and line level analog to receiver seperately?