If your Blu-ray player can bitstream the newer lossless audio codecs, then picking up a newer AVR such as the Yamaha RX-V 663 will give you internal decoding, 7.1 channel pre outs, YPAO room optimization with mic, good surround field modes, and a phonograph pre-amp stage built in.
It's a heck of an AVR / pre-pro combo for around $350 online. Step up to the RX-V863 and you add a good 1080p scaler for all video inputs.
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