Glad to hear the new 804 is performing for you. The 604 sounded like it just had a low subwoofer level output for some reason. The 10dB LFE issue wouldn't apply to CDs and shouldn't be a problem over Optical SPDIF- just the multichannel PCM (at least you would think, who knows?
In regard to the CD audio dropping out, your player isn't sitting on or near the sub where maybe the louder volume is vibrating it, causing it to skip?
Good luck and enjoy the audio now, after you have put in so much research