I have a 1050 that I would like to utilize as a bedroom system. I am looking at replacement options and have seen Sherwood Newcastle R-865 on ebay for prices that are comparable (especially for used boxes with the 1070). While I have been very impressed by Outlaw, it would appear that the R-865 is a largely less capable 990 with some amps thrown in. I would be using either system with a separate Parasound 1200A to drive the fronts.

Any thoughts on which might be a better choice?

The R-965 is the origin for the Model 990's platform. The R-865 appears from the write-up on Sherwood's site to be pretty similar to the 965. It shares the same DSP chip (although the 1070 also uses this chip, the 49400). It has the same DAC's as the 965, which is pretty darn good stuff, and a second zone.

On the other hand, the 865 does get a bit skimpy in certain respects. It has one less component input than the 1070 (two rather than three) and fewer inputs across the board on the rear panel (two coaxial and two optical along with three stereo analog audio and three audio/video inputs on the 865 compared to three coaxial and three optical along with three stereo analog audio and four audio/video inputs on the 1070). If it is like the R-965, it also has a less flexible bass managemnet implementation (I think just two crossovers instead of the 1070's four crossovers). And if course it lacks the 1070's DVI switching.

I can't say that either option is going to be bad choice by any means. I am very fond of the 990's sound quality for music, and if it's any indication of what the R-865 can do then it's certainly hard to argue against. Both offer a few extra features over the other. I don't know what the warranty situation is with used Sherwoods (not all warranties are transferrable), so that might factor into the equation - or into how good a price you can get on an R-865.