I've had budget Denon and Onkyo AVRS. Both were inferior in sound quality to my current Onkyo 876. And the 7125 was a step up in sound quality when I added it to the 876. But I think you can get to a point of diminishing returns certainly.
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Home Theater: Epson 8100, Onkyo 876, Outlaw 7125, Oppo 103, Speakers: Paradim Monitor 7, cc370, Totem Lynks x 4
2 Channel system: Oppo 95, Parasound Halo A21, Halo P7, Paradigm Signature S6
Bedroom: NAD C326BEE, Panasonic S97, Tannoy Revolution DC4, Energy Classics