Looking at this new reciever, what does 7.2 refer to?
Stereo subwoofers?

Precisely! 2 subs.

So the LFE from 5.1 encoded disks would go out both sub channels. What about sound below the crossover frequency? Does it imply the left main and surround sub info would go out one sub channel, and similarly other the other side?

I haven't got the foggiest. I went to the HK web site, but they don't seem to have a manual for the 740 available. Did a quick search and the best I could come up with was "EzSet/EQ II extends the system’s functionality by enabling the user to connect two subwoofers to the receiver in a stereo configuration, and then automatically applying equalization and time-delay compensation to both subwoofers individually to achieve unprecedented in-room frequency response accuracy.." I'm not sure if that answers your question satisfactorily, but that's the best I could come up with. Sorry I can't be more help.

Bart, the .2 refers to the use of the new HK EZSet/EQII room equalization system developed by Dr. Toole's group. It allows two subs to be separately calibrated and equalized for all the factors involved. This relates to not only LFE(if and when present)but also the low bass redirected to the subs from speakers set "small". Although full details haven't been announced yet, it doesn't appear that it would be "stereo" in the sense that left bass would go to one sub and right bass(there's usually no such difference)would go to the other.

Room equalization is a developing technology, but at this time it appears that the HK and Audyssey(on some Denons)systems are the most advanced.

John, please stop making me drool. It was hard enough not to lust after the 340s...