I haven't heard the advanced audio formats yet and I think some of my upconverted DVD's look as good as HD cable. I can't really say I've compared HD-DVD's to SD-DVD's but I don't doubt that the XA2 HD movies look better than even the best upconverted DVD's (as you stated).
I do believe your comments about the sound being better with the Denon may be true. Who hasn't heard CD's that sound as good or better than their SACD/DVDA counterparts? Or at least, how many of us couldn't hear the difference. Audio is much more subjective and has reached a very high level of fidelity before Dolby true HD.
I don't agree with your belief in loss of dynamics when playing speakers "small" in the home theater. I have a decent home theater and have compared Large, Large plus subwoofer, and small plus subwoofer, and I think small plus subwoofer sounds the best.
