Need advice for HT LCR and HT Processor Upgrade

I am ready to upgrade my HT setup and would like some advice. I currently have the following equipment and am thinking the first thing I would like to do is upgrade my processor and speakers.

NHT LCR VT-1. I have had these since 1994.
Sherbourne Amps for 7 Channels.
Thiel Powerpoints for all four surrounds.
Velodyne DD 18 Sub
JVC Projector with 84" screen
Pioneer THX Select Receiver. I have owned several processors over the years including Lexicon and B & K, but grew tired of the high initital cost and massive devaluation as technology advanced.

I primarily use this for HT, but would like speakers up front which are good for 2 channel. I really enjoy speakers which handle jazz vocals and are really clear with guitar strings.

I have a budget of 3k for this upgrade. Should I pour most of it into speakers and get a used processor, or should I just stick with a receiver and use the Sherbournes to power LCR?
I'd consider the Marantz AV8801 or the upcoming replacement the AV8802.

You should see improvements with a dedicated pre/pro vs an AVR but more importantly, the Marantz incorporates Audyssey MultiEQ XT32 (and Pro compatible) which would improve the room EQ significantly over the old Pioneer you have.

You don't need an AVR since you are using an external power amp for all channels anyway.
I'd put the money in the speakers. Your power amp is probably ok. I am assuming that you are using the Pioneer as a pre only. You could just get a universal player like an Oppo and dispense with the whole preamp concept, but I'd upgrade thye speakers first and see what you have after you do that.
I second Richard's suggestion of buying the best speakers you can get with your budget. Worry about getting a pre/pro down the road. Splitting your budget could leave you with trade-offs in both speakers and processor.
I would highly recommend getting a set of Thiel front ends. Either 3 MCS1's (which is what I use for my fronts/center) or a MCS1 for the center and a pair of CS2.4's (or CS2.7's if you're looking new, but the 2.4's are just an amazing value when found lightly used). I'm using my CS2.4's in my 2-ch setup.

I would stick with a very good pre/pro and use the amp you already have. The Marantz AV8801 is a great recommendation.
I don't often see many Thiel owners :) but I currently use a Thiel 11.2 system with CS3.7s, SS2.2s, MCS1 and PowerPoint and PowerPoint 1.2s

I also have a third sub - JL f113 for the LFE channel.

They are excellent. But I am not sure if it is going to fit in the budget of 3k :P
OuchÂ… completely missed that quite important detail.

You're right, you're not going to get everything for $3k, but I think you might be able to get a pair of CS2.3's with a MCS1 for that if you look around.
Just to add to the Thiel discussion, I use 1.6s and a SCS4 for a center and am very happy with them. You can certainly do that on your budget, although the speakers can be hard to find used. My one caution would be that the Pioneer may be somewhat bright with the Thiel speakers. IMO Pioneer can be bright, but I do not know if that is in the pre-pro or amp section of their receivers.

Just looked, a pair of 2.4s and a MSC1 are up for sale for $2750 but that would not allow a new pre. You should note that the MSC1 is a big speaker. That is one reason I went with the SCS4.

You might consider getting a used receiver that has pre-outs. Since receivers are high volume compared to 7.1 channel pre-pros using a receiver and ignoring the power section is often a good compromise. Sounds like you may already be doing that with the Pioneer. A used NAD or Marantz might be a good option since you are interested in 2 channel. The lower end NADs do not have room correction and have fewer options than most receivers, but I like the 2 channel sound. You could probably get a used 775 which does have room correction. A Marantz like the SR7007 will have room correction. If you are interested in NAD look at Spearit Sound. They are an authorized dealer and have used and refurbished equipment.