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In walls? Those should not be putting that kind of demand on the receiver...sounds like something is either wrong with the receiver, configured wrong, or wired wrong.

What speakers are you using?

Heat is the enemy, but it is also a necessary evil. If it isn't shutting down and doesn't sound strained, it is probably OK. Hot too the touch isn't unusual, but 160 does seem a bit high - after a long listening period such as a movie, it probably isn't out of the question though.