According to reviews, the Elite series is among the best in consumer HT gear. But universal player / receiver is still limited by the swiss army knife role it plays. It is not a dedicated stereo system, and is built to compete in the HT marketplace, priced lower than perfectionist 2 channel gear.
Like all consumer disc players, your DVD player can be modified to improve its performance. There is a standard approach when modifying digital sources - upgrade the power supply, sample clock, and output stage. These are are all ripe for improvement. Example:
http://www.diyaudio.com/forums/showthread.php?postid=585918Reference Audio Mods does this kind of work, are reputable, and they currently list the big brother of your player in their repertoire. You might contact them to see if they would be willing to do same mods to your player. You might also find that buying a cheapo player like Oppo would give you more bang for the buck in mods without risking the value of your Pioneer Elite player. Oppo has been modded 1000's of times, it's a known commodity and holds its own value as modded. Your Pioneer would become almost worthless if it were modded, IMO, while the Oppo deserves to be modded.
I don't know much about the receiver, but Elite series have recieved some decent reviews, so all I can say is run the best source you can into the receiver as analog, then set the receiver to the most innocuous settings possible. There may be a setting like Direct, or Pure Direct (Onkyo) which shuts off all digital processing and bass management which will harm the sound of a great source component. Even the Stereo setting on my Onkyo receiver includes bass management and digital crossover so I must choose Pure Direct to get "amps only." These actually did sound pretty good on my big speakers. Read your manual to figure out what setting equals pure amp with no processing for your Pioneer receiver.
Carlman is right, there is a small chance that the receivers DAC is decent, but I wouldn't put money that it could come close to a modestly modified external player, or external DAC. Beware of the low priced DACs though, there are zillions of them now, and not all are really as good as the hype. Tubes don't always mean good sound. Do your research and ask for opinions and advice before you buy something - get it used if you can.
If you are using the wires that came with your Pioneer equipment, consider upgrading the connection wires. It makes a huge difference, proportional to the money you spend. I always recommend JPS brand wires, but there are many good aftermarket wire companies. AudioQuest, Shunyata, Kimber, all make quality wires in the lower price brackets. I'm not talking about Monster cable. Blue Jeans cable is another good custom wire maker, though not as focused on high end audio as the other brands. In stereophile there is an ad running for years from a mail order company selling audioquest speaker wire
really cheap.
Lastly you haven't mentioned your speakers. Wires and source mods are important, but speakers are most important to the sound of your system. They have the hardest job and good speaker design is the blackest art in all of audio science. While many of us nutcase audiophiles migh scoff at paying $10,000 for a cd player (they do exist) that much for speakers is not uncommon because of the big effect the peakers have on the overal sound quality, they deserve more money than other components. Again, used market is the place to start. If you are using a brand of speakers specifically marketed for home theater then you will be missing out on some of the subtle pleasures of high end 2 channel audio. Using a receiver as an amplifier will limit what you can achieve also, but not as much as the speakers. What speakers do you have?
What is your budget for upgrading your system?
..... and, Welcome to AudioNervosa, Headspace!
Rich