Why would I set the LFE on the receiver to 120hz?
By specification, the LFE channel in 5.1/7.1 multichannel content goes up to 120Hz. If you leave the LPF in the receiver at the default 80Hz there is the possibility
that you will roll off some LFE content between 80-120Hz. However, there is probably so little LFE content between 80-120 that it's not a very big deal.... that being said, the 120Hz setting is corrected as recommended personally by the founder of Audyssey (and codified in the Audyssey Setup Guide) just to ensure that you are getting the full LFE channel.
Again, as noted above the LFE LPF is NOT a crossover and does not affect the bass management of the speakers themselves.
You DO want to have the crossover knob on the sub itself either defeated (if possible) or turned all the way up (if there is no bypass setting) so that the filter in the sub is not "overlapping" with the digital bass management in the receiver.
Audyssey set the crossovers too high for my speakers.
the thing to realize is that speaker specs are often "generous", whereas Audyssey is measuring the actual low-end of response of your speakers in your room
. Room acoustics can dramatically affect the freq. response of your speakers. For example, if your front speakers are relatively small satellite or bookshelf speakers and are not very close to the wall it would explain why the measured low-end is a little higher than the specs.
What are your speakers?