Help me make sense of this - Midfi system sounding better hifi.

Could bi-amp with a class A/B amp on the woofers that can handle your impedance dip, leaving the class A to work its magic on the mid/tops.

The onkyo m-306 is a preamp not a power amp.do you mean the 506?

I agree with @russ69 . My experience is that B&W speakers, while extremely highly resolving, tend to err on the side of brightness. Many people pair them with high powered tube amps for that reason, McIntosh being the classic pairing. The Krell, while it's giving you tons of detail, is probabky just not a good match because now it's all detail but the "music" the "feeling" is all gone. You're getting all of that on spades with the high sensitivity Klipsch being run with lots of power. Listen close and I bet a lot of the clarity and detail is gone though. Find yourself some nice big tube amps and you'll be a happy man I suspect. 

@gonglee3 

Are you using the same room for both systems? If not that could be your answer why the midfi sounds better than the Hifi. The room is the most important component. 

I agree, the room is the most important component. But after that, the speakers. B&W (and KEF) are known for their tonal balance and imaging, not so much their dynamics - Pace Rhythm and Timing (PRaT, as the Brits call it) and slam, certainly not the way Klipsch and some other brands like JBL are. These are subjective qualities yet instantly identifiable when heard. Maybe some kind of dynamic compression. Finding a speaker that combines dynamics, imaging and tonality can be tough.

After that, the ability of the amp to handle the impedance (deliver current) and control the drivers especially their back EMF is a key part of amp-speaker matching. Back in the 'receiver wars'  era the 100w/Ch and up mainstream receivers all sounded horrible with demanding loads, like Double Advents, or big JBLs and Altecs due to budget-compromised power supplies and heavy current limiting that allowed admirable numbers on the bench, but poor performance with demanding speaker loads. To a lesser extent it still happens today, as amp designs have improved. But it remains - some otherwise excellent amp designs presuppose certain speaker behaviors, and just don't sound 'right' with others. 

Beyond those items, the rest is all front end and source, a whole ' nother set of topics.