Trying to fix specific issues with my listening area

90% of time I feel my RX-A3060 is a fine performer on daily tasks. Unfortunately, the other 10% of the time when I want some more extreme forms of music at much louder volumes, I feel like it's missing the magic was contained in my first Yamaha from the 90s (I don't remember the model). It's really hard to quantify without using flowery and poetic language. My current setup is as follows.

Yamaha RX-A3060
2 Klipsch RF-7 II
1 Klipsch RC-64 II
2 Klipsch RP-250S
2 SVS PC-2000 

Like many homes, our floor plan is not ideal for critical listening so we are making due with what we have. There is no perfect seat in our living room.It's designed to entertain 4 people with games,movies and music with a fair amount of compromises. This is a very common floor plan in South Florida.

When sitting on "Couch 1" (see Google doc), it sounds good until you increase the volume on the receiver to "-16.5 dB" and then it starts sounding harsh.I measured the volume at that seating position at 76 dB. I would like to get to 85 dB every once in a while when I'm in the mood for something loud.I think the harshness is coming from the Yamaha/Speaker combo but I'm not 100% sure of it.The room has a massive rug on the tiled floor plus there is a couch facing the "wrong way" in front of one of the speakers. I'm leaning towards the Yamaha/Speaker/Room combo having a timbre that kicks in once you hit -18 to -16 dB on the display.It's like I turned on an instant "Make it sound harsh" button when hitting that volume.

Here's some of the things I'm doing to correct the issue.

I'm ordering some room treatments for the areas I can fit treatments from GIK.

I turned off YPAO by using the Yamaha Pure Direct feature.
I got some interesting results.
The bottom end was a little less refined but the harshness was reduced a fair amount.
I'm going to try to manually fix the TPAO results using the built in EQ.

Here's what I'm planning to do in the future
I'm going to buy an external amp at some point just so I can off the av receiver hamster wheel
and get an amp that I can count on for years.
I'm going to look at various Tekton speakers if I'm still having issues after resolving everything else.
I haven't added any gear yet because I don't want to buy more gear and still have the same issues.
Hopefully this helps someone else.

You are on the right track with Tekton, it will be an improvement. And acoustics, depending on the meaning of "massive rug" and how much of the tile floor it covers it may well be too many hard surfaces contributing to the harshness you're hearing. 

But my money's riding on it being the AVR. Those things are all pretty bad in terms of sound quality. You already noticed it sounds better with some of the processing turned off. The problem is all those processors and amps and other stuff is still there in the box no matter how "Pure Direct" they want to pretend it is. Pure Direct in a AVR. Good one.

If you want lots of channels you are pretty much stuck with the AVR. But if you want sound quality its pretty easy. Ditch the AVR and surrounds, keep the subs, and get a decent quality stereo integrated amp with Tektons. Whichever ones you can afford after selling the AVR and Klipsch. This will be a huge improvement. At 85dB it will be clean and clear and nowhere near harsh.
Room acoustics are  a great first step, they'll live with you no matter what you find.

I have experienced room acoustics as the root cause of problems similar to what you are experiencing.  The amount of reflected high frequency hash makes things sound harsh at higher listening levels, but OK at lower volume, so I would leave everything alone until those are in.  After they are installed, re-do the ARC and see if you find it performing a lot better than before.  It often does.

One thing I did not read is whether or not you are listening to all speakers at the same time.  If so, turn off all but the L&R.
One final tip, a great way to assess room vs. speaker/amp issues is to get up close to the speaker. Unfortunately this may be a little loud, but see if your perception of the problem changes next to the speaker, or is worse. 

If it changes, it's the room.  If not, it's the speaker/amp combo.
I would agree with millercarbon on this.  I think your Yamaha is running out of gas (smaller power supply).  I would probably get an external amplifier for the left/center/right (at least) and use the pre-outs on the receiver to connect to amp. 

That being said, I don't have experience with those Klipsch speakers, so the harshness could be coming from them.
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I don't remember since I haven't measured it in a while. It's a three room open floor plan that is at least 30 x 25

 " Whether or not you can re-orient your room, start by dividing the length of your room by odd numbers. This gives you several options from the front wall to place the plane of your speakers. The same thing applies to your listening position. If you’re backed up against a wall, or otherwise sitting in a room node, the sound is going to be matter where you placed your speakers."
I can't change the layout too much because the right wall is all windows with heavy curtains on them and the left side continues into the dining room. Also, the front speakers and subs are 24 inches away from the wall so they are not too bass heavy. Changing the couches to a V shape would let me get the surrounds away from the wall, though.

One thing I did not read is whether or not you are listening to all i speakers at the same time. If so, turn off all but the L&R.

I use two channel stereo settings for normal releases and 5.1 without DSP effects for my 5.1 audio sources.

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I’d normally agree with the AVR comments, but I worked for Magnolia for a bit and spent a lot of time with your AVR driving the B&W 804D3, which is not the easiest load for an amp. The 804s sounded sublime with the 3060 — which, frankly, surprised the hell out of me — even when cranked to very loud levels. Many people left that room shaking their heads in disbelief of what they heard (along with the price of the speakers). Your speakers are a relatively easy load that I highly doubt the 3060 would have any problem driving cleanly to near deafening levels. However, it is possible the Yamaha’s inherent character just doesn’t work for you in combination with the Klipsch.  BTW, it would be interesting to know what speakers you were using with the old Yammy if they were not what you’re using now. 

Moving on, If you don’t have anything draped over the TV that could be a big part of the problem as it will emphasize first reflections from the left speaker and possibly reflections from the right speaker as well. That might also explain why the sound degrades as the volume increases. If the TV is exposed, try throwing a blanket or comforter over it and see if that helps. Anyway, hope this helps and best of luck.
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The Klipsch RF-7 II loudspeakers are 101db/8 ohm. It takes only 1 watt to produce 101dB at 1 meter from the speakers, 95dB at 2 meters, 89dB at 3 meters. How far from the speakers is your listening position at the sofa?

With such sensitive loudspeakers, it’s unlikely the amplifier is running out of steam...let alone being pushed moderately hard.

What’s the source component?
FLAC files played thru the AVR DAC.
Around 12 feet away
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Just my 2 cents.

MC is correct about AV receivers for critical listening. I have one, a Yamaha V781. As it has pre-outs, first I finally tried a separate B&K amp to power the fronts, that helped sweeten the sound when in two channel, but I was being bothered by many to get a 2 channel preamp as well. I didn’t want to believe I needed to do that, heck, the B&K had 135 wpc and was a nice improvement and sounded pretty good using the Yamaha as the preamp. Then I replaced the B&K with an old Belles 400A, with 200 wpc. Very very nicer still. But again, everyone said ‘get a good preamp’!

Well, I finally did. Got a Parasound preamp with a pass-thru to run my Yamaha though when in HT mode, but all my 2 channel runs through the Parasound pre and Belles amp.

I was wrong, they were right, it sounds incredibly better for 2 channel, and I was shocked at the difference.

No matter what I did to the Yamaha, I could not make it sound like the Parasound/Belles combo. Yamaha Pure Direct? That may have been the worst sound of all.

So, now I have a very nice 2 channel set-up, and with a push of the Parasound remote, can go pass-through and have my HT as well via the Yamaha, albeit in my case, the fronts are still powered by the Belles. You could consider a nice integrated with a pass-through and do the same, your Yamaha has pre-outs for the front channel. Beyond that, you may have other issues, but I can tell you, you won’t get what you are looking for with your Yamaha as a 2 channel ‘integrated’ or ‘pre’. May as well start there.

I can be stubborn, but finally learned that didn’t get me what I wanted. Much happier now.

FWIW, IMO, Its not that the AVR runs out of power. Its that it is built for movies. Dialogue & explosions are its main -product. It doesn't need to focus on the 20-20k hz  the way that a 2 channel does. Consider it like a good off road vehicle that isn't good at drag racing. That doesn't mean its inferior. Its just in the wrong  arena. Sure, it will run down the track. But not that fast. Likewise the AVR will play music. But forget critical listening to music
it would be interesting to know what speakers you were using with the old Yammy if they were not what you’re using now.
They were late 90's Klipsch and I don't remember the model.
I do remember them being $800.00 for the set.