I'd say PL2 should be a definite consideration if buying a reciever, it makes a lot of difference to VHS, TV and stereo DVDs. Improvements to DPL are not just the stereo surrounds, but there's improved channel seperation, improved steering and all channels are full range.
PL2's adjustments only affect the music mode, if you don't intend on using PL2 for music you'll not miss them.
I may be repeating myself here, but I am getting Dolby Digital broadcasts on cable. When I change to a station that is not 5.1, my receiver turns on the ProLogic-II. When the receiver receives 5.1, it turns off the PL-II.
You are right on target, broadcast DD 5.1 turns on DD 5.1 and requires a digital connection between your cable box, satellite receiver, or DVD player to your receiver/prepro.
Any other digital broadcast streams (which can be PCM, DD 2.0, DD Stereo, or DD Surround) on that digital connection between your cable box, satellite receiver, or DVD player can use DPL-II and simulate DD 5.1.
Any analog L&R audio outputs from a cable box, satellite receiver, DVD player, VCR, stereo TV receiver, etc. to your receiver/prepro can also use DPL-II to simulate DD 5.1.
Just want to thank everyone for there input. I will probably stick with the Nad 761 even though it does not have DPL II. I love the way it sounds with my PSB speakers and they have a program called EARS which they developed in conjunction with Dolby Labs which does enhance two channel sounds.
Ring another vote here for DPLII as well. I just finished watching "The Lover" which is in two-channel stereo surround only, and DPLII added an entirely new dimension to it. I would say that it definitely sounded better than it did when I first saw it theatrically back in 1992. I have a Denon 1802, and often utilize it in "music" mode for many of my CD's. The subwoofer and low end gets quite a workout with DPLII, something that was sorely lacking in regular DPL. Music that happens to be extremely bass heavy, I usually prefer to use the Denon's five-channel stereo instead. So yes, I would definitely say DPLII is a MUST if you are buying a new receiver.
I heard an interesting thing with DPL-2 the other day. The movie TIME CODE was on HBO, and I decided to watch it. DPL-2 actually decoded the sound from the different frames to the surrounds in a very effective way during the movie, and it was convincingly similar to a 5.1 mix. VERY cool.