FWIW I have an older Parasound Halo C2. It doesn't decode HD audio but I get around that by using the multichannel inputs with decoding done in an Oppo BDP95. This gives me XLRs and a very good setup overall. However I will eventually upgrade to a more modern unit. I agree that for audio quality alone there is probably little difference between this and a good quality AVR.
I was thinking about getting the Oppo and realized that i too have an older AVR now which doesn't have HDMI inputs.
However, i can do the multi channel audio as you say.
Then i also remembered the tv in that room would have to be replaced too.....
It is always that domino effect.