So, will the sound be any different from my current yammy if I get an onkyo 807?
Short answer: Probably, it depends....
Long answer (my opinion only, and only if you have time):
First of all, my comments are based on using them as prepro and in pure direct mode only.
On paper both have audio specs such as THD, S/N FR that tells me in pure direct (unprocessed sound) they should sound the same to most people subject to whether the person has above average hearing and/or trained to hear the otherwise hard to detect difference; or the person is prone to Placebo effect, or both. My guess (based on people I know and things I read) is that probably most of us are affected by Placebo at least to a point. So after spending the money and seeing those heavier (here I mean power amps) and typically better looking gear hook up via more expensive cables to the speakers, the system would seem to have come alive, even in some cases, the speakers may not be that hi-fi to begin with.
In other words, our brain could become more forgiving to those same imperfections that may have nothing to do with the prepro and are still audible, but somehow got temporarily filtered out. Over time, some of us may begin to hear those imperfections again. Then some of us would begin to think may be the original lower cost gear were just as good, while others may be not think so and would be wanting to upgrade again. Yet others may continue to convince themselves the more expensive gear has got to sound better. In fact, since the the new gear have more features and more powerful sound processing, they mostly like do sound better (at least different) in the overall scheme of things. Afterall, for some of us who spend 20% or less in serious classical music listening, most of the time we could well be using sound processing in one form or another so yes even my longer answer is, yes, you should be able to hear a difference most of the time.
Given your budget, your choices seem to be limited to Onkyo, Yamaha and Marantz products because they do offer pre-outs at that price point. If you go with Onkyo, I would go with a new 708 rather than a refurbished 807. If you are sure you don't need HDMI1.4 then you can also consider the older Marantz models such as the SR7002, or even the Yamaha RX-V1900 for just a little more money ($658):
http://www.amazon.com/Yamaha-RX-V1900BL-7-1-Channel-Theater-Receiver/dp/B001E5CDS2/ref=sr_1_1?s=electronics&ie=UTF8&qid=1284905649&sr=1-1
In that case you will get a better quality pre amp section and gain a few watts for your surround speakers, but you may lose a few of the latest features.
