As far as I know, most multichannel power amps are rated to work with 1.2v input voltage as high limit through unbalanced (1.5v max). That's why isn't a good idea to test AVR outputs at 2v.
Take a look to Parasound and Marantz power amps to check it. Emotiva poweramps go to 1.5v but no higher.
I just humbly suggest all test in this equipments should be done with those numbers in mind.
And most modern AVR, also, as far as I know perform an ADC, in all analog inputs. Even when in direct modes are enabled. In Denon/Marantz with AKM AK5538, probably at 192khz to be as transparent as possible.
And I would like to humbly suggest that Denon/Marantz specified 1.2 V likely as a matter of standardization, as at that voltage, with 29 dB gain the amp can reach about 140 W, a typical rated output value for the D&M AVRs in the AVR-X4000/SR7000 series. So rated preamp output 1.2 V for rated power amp output of 140 W seems to make sense. That does not mean, and D&M never claimed, that the 1.2 V is maximum.
In fact Yamaha rated their AVR pre out just 1 V, as do some audiophile leaning brands, yet they all measured on various test bench much higher than 1 V.
Audioholics have confirmed more than once that those receivers could output up to about 4 V unclipped (probably meant around 0.1% THD??) Denon has also provided their internal measurements, use the AP analyzer as well that shows the AVR-X3600H clipped at 4.25 V.
I attached the diagram in one of my earlier post, for your convenience, here it is again:
I do have some faint hope that if
@amirm (hope he would read this) still have the receiver hooked up, he would retest it in pure direct mode and make sure ECO is turned off, not auto. ECO should have no effects on the preamp section but its effect on the power amp section may have some bad influence reflect back to the preamp (just my stupid guess..).
I know Amir must have reason to believe the analog input signal didn't go through A to D, but I have seen the schematics of the X3400H, and the fact that in Stereo you can do EQ including Audyssey, it really must go through ADC and it would be hard to imagine the X3500H is any different.
Only in pure direct, that we can be sure analog input will bypass the ADC chip AK5358 that is not a very good one to begin with.