i have a yahama - htr5860 - and the sound quality of these lower level AV receivers is pure crap. it's very flat and 2 dimensional. i would no way recommend them for sound unless you have a decent amp to pre-out it to. the yamaha digital effects suck pretty bad too, imo. they're okay for the dolby and surround stuff.
i was talking to the guy at axiom about all this, and the impression i came away with is that the HKs have better power supplies, transformers, etc. and therefore might sound better. so go for yamaha if you want, but after my experiences, i would no way 1) buy yamaha over HK or Denon (at these price levels at least, ~$500), or 2) buy *any* AV receiver that doesn't have pre-outs. that yam probably does, not sure, but make sure you have a good amp or receiver to use with it.
luckily i had some old receivers with good SQ that i could tell the difference in comparison to. i think a lot of people have just never heard decent SQ so they think the entry level AV receivers sound okay. but take my word for it, they don't. i've tried a few times hooking up the speakers directly to the receiver, thinking i must have been mistaken, or had some settings wrong or something like that. everytime i try it, i listen for about 30 seconds and that's all i can take, it's that bad. i plug back in through the external amp, and voila, back to decent sound again. next time, or if i can get rid of the yamaha (interested? i'll give you a good deal

) i'm all about HK, Denon, NAD, etc.