Yes, you can use the MC-700 as a DAC or pre-amp, even for a stereo system.
As for subs, I would recommend getting two good subs over one big one. In your budget I would be looking at a pair of Outlaw Audio Ultra-X12 subs, Hsu VTF-2 mk5s, SVS PB-2000s or PC-2000s, or Monoprice Monolith THX 10"s or 12"s.
If you like the sound of the MartinLogan ESLs, might as well keep em. You might demo other speakers just to see what is out there, since the ESLs have such a peculiar sound.