I think what it is down to is either a DAC or a new CD player, and I don't think a DAC will be a big improvement for around $200. I think a CD player is the way to go, but your point is interesting about Blu-ray or HD DVD. Would both of these players play CD's as well as DVD/Blu-ray? Is it common for them to have very good sound quality? (Any suggestions on a brand?)
I think a used CD player from a reputable company is my best bet right now, eBay is full of used CD players for cheap.
When you say plugged in you mean that everything is on but the song is paused, correct? There isn't any noise when the track is paused, no matter what the volume is.
You can get a really great DAC for $150, the HRT Musicstreamer (USB DAC) but it uses a USB input, and your CD player does not have a USB out (I think).
The DAC Destroyer (USB DAC) is good and only $50 (I have one) but also uses a USB input.
Most DACs use RCA (analog) for output.
Blu-ray players can read Blu-ray, DVD & CD disks.
Blu-ray disks are around 30 times denser packed, data wise, then CDs, so reading a CD should be very easy for them.
You can run an HMDI cable from the Blu-ray player to the Denon.
There are some very decent DACs on eBay for around $60, that can input optical/coaxial/USB and output RCA.
I'm guessing a used high end CD player would not be better really then a new Blu-ray player.
In previous posts I do not think I was talking about pausing.