It would be useful to determine if the problem is related to the amplifier or processing sections of the receiver.

As a point of reference, I have the same processing platform (the 970) and have never had an issue like that.

Does the amplifier section of the 1070 have some sort of clipping protection? Are your speakers hard to drive? The reason I ask is that you seem to experience the problem at loud playback levels, which may point to some issue with over-driving the 1070.

Lastly, did the problem appear only after you switched to the optical cable? (trying to rule out a bad cable.)

gonk? Any thoughts?