Thank you for clarifying your point Jack. The fact is, I am not aware of any current mid level (say one that costs>$500) receiver that don't have individual discrete internal amps. For examples, any 7 channel Yamaha RX-V series receivers would have 7 discrete internal amplifiers.
Your other question about better SQ at relatively lower level is one that I cannot answer. It is like the double blind test thing, there are at least two camps of people. All I can say is that more power is always better, whether you need it or not. Other than that, I would say for sure you need an external amp if you have one or more of the following conditions/environment:
1. A relatively large room, e.g. 25X20X10.
2. 6 ohm nominal speakers with sensitivity<87 dB.
3. 4 ohm speakers.
4. Difficult to drive speakers.
5. Listen to 5, 7 Stereo mode. (I don't, to me that's not true stereo, and it won't sound anything remotely like live music, but some people like it, this mode is very demanding on a multi-channel mid level receiver).
6. Your mid level receiver has a nice prepro section but a weak, aging, or defective power amp section.
7. You enjoy listening at high SPL levels, say >90 dB all the time and your favourite music produces very high and frequent dynamic peaks (check in with an audiologist regularly in that case).
8. You have great hearing, or gifted ability, that you really could pick out different mid level receivers and amps in a blind test based on their different SQ, slight difference in fequency response, and/or distortion levels.
9. You firmly believe you have such gifted hearing even though you don't.
10. You want to have peace of mind, knowing that your receiver is now back up by a 5 or 7X200WPC external amp such that you don't have to worry about whether you are subjected to conditions 1 through 9.
For me, 10 alone, is a good enough reason to get an amp.
Note: I am talking about upgrade receiver vs adding an ext. amp, none of the above applies to people who own all truely high end components from source to speakers.
