I had a similar experience with a Yamaha AVR. I forget the model number, but it cost $299 in 2004. For $50 more I got an HK AVR 245 and the sound improvement was easily noticeable. In addition, the HK doesn't clip when I run additional stereo speakers in other zones through a speaker selector. The Yamaha couldn't handle that.
Interestingly, I gave the Yamaha to a friend who replaced a Sony receiver in an all Sony system ($1000 total price for all components and speakers purchased about 1990) and it made the Sony speakers sound dramatically better. The difference was much greater than the difference we had noticed between the HK and Yamaha. It sounded so good in fact that my friend got over his envy of my system and quit shopping for a home theater system.
