...are you better off getting what I would consider midfi receivers with all the latest processing, or getting older separates that cost bank in their day but going for pretty cheep now and simply use a blu ray player that can output the latest formats in analog to the analog inputs of the higher end separates?
I would vote for option 2, i.e., older separates with a blu ray player that decodes the latest codecs. My reasoning: Much of the software you are likely to watch will not contain the new codecs, so you will be listening to DD and DTS much of the time. On those older formats, there is a big difference in sound quality between midfi receivers and hifi separates, IME.
In addition, you will still be able to enjoy the increased format resolution of the software that contains the new codecs, provided you buy a blu ray player that decodes them. Arguably, going with older hifi separates will allow you to enjoy the increased resolution of the new codecs even more than going with a midfi receiver, simply because the hifi separates with have inherently higher analog resolution with which to reveal the increased format resolution.