This theater started with a B&K Components AVP-2000 processor and AV-5000 amp with decent results. The Upgrade Bug hit hard when I found a used, but excellent shape EAD TheaterMaster Ovation processor and PowerMaster 500 for only $2,700! I now have a fantastic preamp/proc. for both music and HT that is upgradable and sounds much smoother, musically cohesive and dynamic than the old B&K AVP2000. Not to mention adding DD, DTS, and HDCD! Unfortunately, my Sony DVD player is an early model that does not output a DTS signal, so I'm not able to listen in DTS yet. I absolutely love the CAL Icon MkII Power Boss CD Player - fantastic bass control and wide open sound. Also decodes HDCD. Some people have told me that the EAD PowerMaster 500 amp sounds better than the higher powered PM1000 and PM2000. I don't know because I haven't heard them, but many people are disappointed that the PM500 is discontinued. The B&W DM series speakers do an adequate job, but I think they are a little too laid back in combination with the EAD units, and I don't think I am hearing all the potential detail and depth that the EAD is capable of. The weakest link now would probably be the subwoofer (which was all I could afford at the time, but I have never been satisfied with it). Just got the ELCO DC-32 digital coax IC for $45 on Audiogon because it is discontinued (was previously $300). No comment yet until I break it in and give it a listen. The company says they discontinued it because the silver cable slowly oxidizes and gradually loses its sound quality over time, but that I should enjoy about 3 years of normal use before having to get a new cable. For $45, it has to be better than the Radio Shack digital coax I was temporarily using! The LAT International IC and speaker cables are a fantastic value and in my listening tests, I preferred them by a wide margin over Kimber 8TC, Tara RSC and some XLO cables I borrowed from the Cable Company. You would have a hard time beating the LATs at their price point!
The EAD equipment outclasses the rest of your system. You have a great foundation. The B&W DM's are more on a Marantz/Adcom/Rotel level. The CDM or Nautilus B&W's would show you more of what your EAD has to offer. If you think the DM's are laid back, the Nautilus might be right, because they can be quite aggressive on other components, namely Lexicon. Also, don't skimp on your DVD source. The source can improve your current speakers more than most people realize. I would audition DVD players with your current set-up before anything else (Arcam DV88?).