Home Theater Upgrade Help - NHT/Lexicon

currently I have a lexicon DC-2 processor and an NHT 5:1 amplifer driving NHT 2.9, AC-2 and L5 speakers and finally a James EMB-1200 Sub. The sound is wonderful, but it's time to upgrade.

I want to add blu-ray and the DAC's to handle the sound thru HDMI 1.3. I have several options.

1) upgrade the DC-2 with 7 channels of analog input ($185)

2) Move to an NHT Processor which would perfectly equalize my NHT speakers and match the NHT AMP, but it does not handle HDMI 1.3 so I would have to buy a blu-ray player to output pure audio on analog..and then the NHT wouldn't apply the equalization to those inputs, so I think this is a bad move (about $700

3) Buy a new processor that is up to date on codecs and inputs....something like the Integra DTC-9.9...about $2K

I don't want to spend a fortune on this upgrade..I have to buy a blu-ray player....but I do want a processor that isn't an amp also (eliminates Denon) and has good surround sound processing. While I see many, they tend to be $5K an up...and the lexicon offerings are rediculously priced and lack the 1.3 audio codecs and function anyway.

I would like a processor that has automatic room equalization using microphones....if that's possible. The NHT sort of has this, but it really isn't equalizing the room as much as it's setting volumes and delays.

What would you buy? Is the Integra the best of breed in the reasonable price category?
"I would like a processor that has automatic room equalization using microphones." The only one of your options that will satisfy this criterion is 3.

Why don't you look at the upcoming Outlaw 997 processor that will be out around March 2009. It will cost about $1400, so you will have some funds left over to upgrade other components/speakers as well.