I would think an improvement, how much of one ?
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I cannot comment on the how M1's will compare to your AVR.
I can tell you that if your heart and ears are set on the Krell, then this is what you should get. Especially at the price quoted - very attractive indeed! I do not know the exact reason that you cannot accommodate it. From the looks of your system, maybe it is a your AV cabinet.
If so, get another cabinet. This hobby is all about sound, not furniture. I went through 4 AV stands until I found one the was right for my needs.
You may be looking at the M1's as a placebo because you cannot get what you really want. It has been my painful and expensive experience in this hobby, not to get what we really want right away. Because eventually we do, and at much greater cost.
The cabinet was a long searched for purchase so given my 1300 sq-ft house with two kids under 2-1/2 there are just limitations. I would have to justify $800 that I don't have in the budget and then force the Krell into my system. I am making the adult choice to walk away. In the future we will likely end up in a larger house with older kids and a few more options will be open to me.