I'd always go with a dedicated centre speaker,
And since it's mainly dialogue and is positional audio, it really should be hindered by having a mid-sized speaker for it, as opposed to a floor stander, any bass can be diverted by the amp to other speakers/subwoofer, and most decent centre speakers do an absolutely great job..
I'd certainly say that mixing another audio stream into the normal L/R Pair and relying on 'phantom' centre processing is as flawed as any argument IMO if SQ is the aim..
But then, ideally, for proper AV, all speakers should be as closely matched (or identical) as possible..
I've gone from a full B&W Floorstanders/Bookshelf (DM603/DM601/CCR6) which sounded superb for music, but overwhelmed and didn't ever blend that well, and yes, I did have the same thought about the centre, and used the DM603's to provide a phantom centre, but it all got overwhelmed when the action picked up..
I actually have gone to a full set of B&W M1 satellites and a resonable sub, these work better for me in a smaller room (17 * 13), each channel seems to be more distinct and when cranked up things don't break down as all the bass is done by the sub, for impact and presence at high volume, it blows my previous stuff out the water.. But, musically, they are pretty good in movies, but not quite there for normal listening, but since I listen to music less then 10% of the time, I have just bought some good headphones to cater for that..
I've also recently upgraded to the Yam 667, it's excellent out of the box, incredibly detailed and holds it together well at high volumes, the Onkyo has more presence at lower volumes, but I just like the clinical signature of the Yamaha, and I do like to crank it up and it's so nice that it doesn't get overly harsh..