1) As you now realize I don't have the 3700, my potential candidates for doing what I want in one of my 2 ch system are:
a) X3600H, X3700H, even X3500H, but I don't thing I can find one new, and am always skeptical of used ones that are out of warranty.
b) MOTU M4, but I am not sure if I spent $400 on the M4, how would I do volume control, to pair it with a 4 channel preamp or 2X2ch preamp is not going to be tricky.
c) Give up on using 2 subs with my BMRs, but just 1, in that case DLBC would seem under utilized, though with the discounts I wouldn't complaining much about it.
Ideally, I would like to use a real 2.2 receiver or integrated amp but there is no such animal that I am aware of. If Dirac has a smart and more risk taking marketing team, they would work with the likes of D+M, NAD, Arcam etc., to market a real 2.2 device instead of settling on the silly subwoofer outputs that are simply connected to the left/right channels no different than using Y-connectors externally.
To be clear, there are no 2.2 or even 2.1 contents for HT, but in my opinion, manufacturers should take a risk and do try marketing such a product if they would bet on room correction such as DL will soon gain popularity.
May be they are smart enough to know that 2 channel audiophiles are too ignorant to know that they could have much better perceptible sound quality by using a mid range gear such as DRA-9000H, NR1200 if such unit can take advantage of DLBC, or the likes of MSO that can integrate the bass of capable tower speakers and multiple subwoofers. It is probably a fact that the 2 channel crowds typically get fixated on the so called sound signature myth, such that they believe for example, there are night and day improvements simply by "upgrading" from their NR1200 to an Anthem STR integrated amp, yet in a DBT they would not be able to perceive much difference if at all, whereas the difference between with and without the use of RC such as DLBC would be much more obvious. In other words, it is likely true that people don't know what they miss, and keep chasing the wrong thing that only work because of their tendency to get easily influenced by marketing information and the price points of the so called high end gear.