What is the advantage of a true preamp?

I agree with everything Sdcampbell has said. In addition, if you are looking for really good stereo audio for music enjoyment in addition to HT performance, you might want to look for a preamp/processor that allows complete bypass of the internal DACs for analogue. I'm not aware of any receivers that allow this, which means that a signal from an analog source is converted to digital and then back to analogue at the output stage. This tends to degrade the signal.

I'm not up-to-date on the latest preamp/processors to suggest one. Aragon's discontinued Soundstage had a full by-pass, essentially using it's Aurem preamp in the one box. The unit listed for around $4000 when it was still being produced but I suspect that you could pick one up for around $2k now. I believe the Simaudio Moon Attraction is a current ly produced model that offers analogue bypass, but I think it lists for over $6000.

Compared to receivers, separates typically offer the advantage of better build quality and improved sonic performance. Receivers inevitably involve a lot of compromises, since the preamp, HT processor, amplifier, and possibly a tuner, are stuffed into one chassis where the audio signal is potentially exposed to a lot of RF and distortion from the various circuits. Hence, one of the primary advantages of a separate pre/pro is that the audio signal is not exposed to the energy field generated by the amplifier's power supply found in a receiver.

If you buy a good separate preamp/processor, it will usually have a better shielded power supply, and better DAC's for decoding the HT surround. Separates can often be upgraded as technology (such as 5.1 vs. 7.1 channel surround) and component parts improve, something rarely possible with a receiver.

There is always some risk in generalizations, but most of the time you will get better audio performance from separates than from a receiver. Bear in mind, however, that there are some pretty decent HT receivers on the market today, several of which sell for $3000 and more (such as the Parasound 2500, the B&K Model 30, and the top-end Rotel). These receivers offer very good to excellent HT performance, and are a sound alternative for people who want a good system but have a limited budget.