Yes, you would still need the Denon. On the rear panel of the receiver, there is a group of outputs called "pre-amp outputs". It's not available on all receivers, but above a certain price point it is standard - and the $1200 price point qualifies as above that price point. By connecting an amplifier like the 7700 or 7200 to the pre-amp outputs on the receiver, you would cease to use the receiver's built-in amps to power your speakers and would instead use the separate amp. (That means that when you hook the amp up you'll also need to move the speaker connections from the receiver's binding posts to the amp's binding posts.)

Would you hear a difference. Yes, I would expect so. The amps in a receiver are subject to an assortment of limitations imposed by available space and available budget. A separate amp like the 7700 tosses those limitations out the window by dedicating all of the space to amplification and including a large power supply. If you look at internal pics of the Outlaw amps, you'll see some large transformers - that's the heart of the power supply, converting 120VAC to a lower voltage that is suitable for audio amplification. Compare that to a picture of the inside of a receiver, and you'll see that the power supply is drastically smaller. That means the receiver has less ability to respond quickly to transients that require surges in current and the ability to drive difficult loads such as low-impedance speakers. There are other reasons to go with separate amplification, such as isolating the lower power signals of the pre-amp section (audio inputs, DSP, and so forth) from the higher power signals produced by the amps, but that gives you some idea of why folks are often drawn to separates.