What about a
Squeezebox?. People seem to love them. I don't know that it is a better or cheaper solution than AppleTV, though.
It seems to me that the main problem here is that all the files are converted to AAC. Instead of treating the symptom, could you restructure the digital library? Doesn't the Denon do FLAC natively, for instance?
If you could convert your music to FLAC files (and then use Amazon to buy 256Mps MP3's instead of buying DRM-protected files from iTunes in the future), you might not actually need any new equipment.
Like me, Dean (Grunt) is a big fan of the
AudialsOne software for a number of reasons. I bought it initially because it will convert DRM protected iTunes files into MP3. There are probably other tools out there as well that might do a fine job if you don't have the DRM issues.
I suppose it depends on your listening habits (both at home and on portables) and the size of your library. I just thought I'd throw it out there.
But either the Squeezebox or AppleTV are probably the best approach.