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In my HT system I use an Oppo UDP-205 to do the processing, feeding the fixed analog 5.1 output into a Krell HTS 7.1. Audio processing in the Oppo is superb and the Krell is just acting as a glorified 5.1 volume control. Works perfectly for me and the cost of a new Oppo UDP-205 and used Krell HTS 7.1 is about half your budget.
There is no problem using the Oppo's volume control. Once upon a time digital volume ocntrols were not a good idea as it cost you bit depth. These days, with internal 32 bit processing, this no longer applies. See here for a presentation by Sabre: http://images.computeraudiophile.com/graphics/2015/1216/digital-vs-analog-volume-control.pdf
I suggest an Anthem AVM-60. I think it is $3K new and can sometimes be found here used. Importantly, it has ARC built in, which is fairly easy to use, and can make a dramatic improvement in SQ especially in rooms that are not acoustically treated. I don't know how it will match with your amp, but I run mine with an Oppo 205 as a source. It provides a terrific home theater experience in a very large room.
on paper it looks ok... but ask Oppo and they'll tell you for best results, its better to use a preamp for the volume control...... know that all volume controls does some harm to the signal.. its just that some does less harm than others.. analog seems to work the best thats why you see higher end preamps/processors incorporate an analog volume control into their all digital preamps.. My Classe SSP800 has an analog volume control for example.. there's many different designs in volume control, each one trying to better the other.. PS Audio claims they make the best one yet
For digital vs analogue volume control, I simply repeat the reference to the Sabre presentation (there is also a longer text by Sabre but I could not quickly find it). Can you hear imperfections at -135dB, and do you have source material that is this clean? Do not forget that analogue volume controls have their weakneses as well, like channel imbalance at lower levels. There are more important things to worry about.
Hi, I also have the Focal Sopra 2, Focal Chorus surrounds and am waiting for the Focal Sopra Center to arrive this week. I am using Marantz 8801 as a preamp/pocessor and am extremely happy with it.
I have tried using the Oppo 95 as a preamp before buying the Marantz and the Focals, but the sound was horrible so I would definitely recommend using a real processor.