I want to change from 2 channel to HT but what....

7.1 isn't going to happen. It's bad enough getting all the extra channels of amplification and finding, locating extra speakers 5.1 much less for the very minor improvement in surround performance in 7.1.
Likewise, bi-amping is a minor improvement for the $ involved. There's better places to put your $.

I decided on the Arcam AVR300. Thedautch is using the AVR300 with Merlins and recommends it as well as two dealers that carry both the Arcam and B&K. It should be here in 5 days. Can't wait. I looked at separates and found a review that compared the AVM20 to the Arcam AVR300 and the reviewer said he liked the AVR300 processor better. If I needed more power I could add an amp to the AVR300 analog outputs when I needed. This made the most sense.

As you said in your post, "I do belive a receiver can sound as good as separates." This makes logical sense why you'd go the Arcam route.
While I have no doubt the Arcam makes good sound for a receiver, and I used to sell that line, it can't compete with separates...good separates that is.
Do yourself a great favor sometime, and add an outboard amp the the receiver, and use the ARcam as a pre/pro. YOu'll be amazed how much better the sound quality is from even a lowely parasound 5 channel amp, and similar!!! The amp's in those receivers really can't hold a candle to a dedicated amp. It's always been that way...not to mention a good pre/pro's preamp section is better as well, especially dynamically.
For the record, and I've sold some good sounding receivers over the years including the original model 100 Arcam, I'd NEVER spend $2k on ANY RECEIVER, EVER! I've worked in this business to long to know better. The sound is just not there for that money. A used $1200-1500 pre/pro and $600-1000 multi channel amp punishes any receiver ever made from my experiences. But, it's fun finding out this stuff, I"ll conceed that.

Thank you Flrnlamb. That is the exact route I am planning to take. The AVM200 used is asking $1700.00 currently on this site. I am getting a new Arcam AVR300 for $1625.00 including shipping. From what I have read, the AVR300 has an exceptional pre-pro. If the 100wpc AVR300 integrated amp isn't enough then I will purchase a separate multi channel power amp to use with the AVR300's pre-outs.

Flrnlamb, I'm no techie, and I respect your experience and knowledge. I come from the high end audio world and up until last winter I would have totally agreed with you about seperates. I generally still do.

But have you actually HEARD the AVR300?

I'm tellin' ya, after auditioning it, the AVR300 is a different animal from your typical HT receiver. It's by far the best HTR I've heard and it really does approach the performance of separates IMHO. It's a whole 'nother league better than the AVR200 and in a completely different universe from the AVR100.

I thought the pre-pro section of the 300 was a real honey, worth the price for that alone. I don't know precisely how Arcam separated the power supplies, isolated noise or what other voodoo they worked, but the amps in the 300 are much better sounding than the 200. Unless you have thirsty, current hogging speakers, I think the AVR300 sounds much better than any other solution I've heard near its street price ($1600-1700) - and that includes the medium priced separates I auditioned (Rotel, B&K, Parasound, and Anthem).

I found the AVR 300 to be very spacious, resolving and dynamic with reasonable speakers, and this is from someone who usually hates music through receivers of any sort. (I'm used to listening to music through full range Alons Vs with 6K mono amps and a 4K preamp). No hardness, no glare, no congestion. In fact, the 300 has an ease and openness that's very appealing.

Music reproduction is where the Arcam outshines other HT receivers and modest separates. The AVR300 doesn't come close to beating my 2 channel system electronics, but my gear cost six times as much - it should sound better! Yet music is very enjoyable through the Arcam - you don't think about what you're missing while listening through it.

IMO the AVR300 is an excellent solution for music lovers getting into HT and HT fans who also want good sound for music. It offers genuine value for the money. They can always use the 300 as a pre/pro and add an outboard multichannel amp as their systems grow. A lot will depend on their speaker demands and room size.

Does the AVR300 surpass the top of the line Lexicons, Krells, Carys, et al? No, but it costs thousands less and for many people, this is as much amp and pre-pro as they'll ever need.