I'm not familiar with how the 4520 handles the additional surrounds but what you surmise sounds reasonable. The Denon wouldn't realize the NanoAVR is even in the chain, to it, it is simply a 5.1/7.1 signal. If you add the NanoAVR and some EQ, the Denon 4520 wouldn't know anything was different than a straight signal from the Oppo. So I would expect it to work well, but with even better sound that is specific to your room/setup.
Deep Sea Sound
"You don't listen to our subs, you EXPERIENCE them!"