AVS Special Member
Join Date: Dec 2007
Location: Southern California
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I would suggest a Harmon-Kardon AV 3490 receiver for a marked improvement in sound quality.
You suggested the possibility of getting a preamp, but then what would you be using for a power amplifier?
Most good tube preamps cost several thousand dollars, but there IS one decent one for under $1000; the Vincent SA-31.
You might also consider looking around for a used Audio Research SP-9 or LS-7 preamp, which might cost under $1000 if you get lucky. Actually, I see on E-bay that someone has an LS-7 which looks nice for an asking price of $999. You might make an offer there.
I don't usually recommend buying used, but Audio Research gear is an exception due to its superior build quality and reliability.