I would say get a new NAD or a used Krell HTS 7.1. I got my Krell HTS for 2k$
Depending on brand, a processor will have better and more DAC's. Better power supply.. (more regulation). also much more filtering for audio, specifically stereo. How many options does one need? i would rather have fewer options and better processing, and overall sound.
I have used a receiver as a processor in the past, but i with a noticeable difference between a dedicated processor and a receiver i will not do that again.
Also, i don't think any receiver has balanced outputs? granted the OP didn't say wether he was using RCA's or balanced cables for his interconnects..
