I found the dialogue in Avatar to be quite good, unfortunately it sounds like a setup issue. I agree with the others about just letting the receiver do its thing with normal Dolby Digital, but Neon has a good point about possible hookup issues.
If we're talking just a DVD player hooked up with optical to the receiver, that will flow DD just fine, in which case you want the receiver in "standard" mode I believe it is called (std button on remote) which will play what is coming from the DVD player without adding any fancy stuff to it.
