What "good quality 7-channel processing" would that be?

With 5.1-channel sources, you could choose EX/ES decoding or CES processing. But those resulted in 6.1 channels, not 7.1 (and CES didn't really do a good job of cancelling rear speaker information from the side speakers).

With 2-channel sources, the situation was no better; i.e., you still ended up with 6 channels of output. You could either use DTS Neo:6 or PLII+CES, which cascaded processing on top of processing (a matrix surround-back channel was being extracted from a pair of surround channels that were matrix derived themselves).

So unless you were using LOGIC7 previously, your Sherwood P-965 does indeed represent the first time you are using 7.1-channel processing (good quality or otherwise).

Best,
Sanjay