1) I just posted some comments in another thread that might help answer this question - basically, my personal preference would be to hang onto the 7100 at least long enough to compare the two.

2) My experience with DVI cable boxes has been a bit interesting. From some comments I've read on AVS and some tinkering with my Pace box this year, it seems that cable box manufacturers have not yet (or at least not as of a year or so ago) been able to make use of the full benefits of a digital video output. My Pace box is a pretty decent HD cable box (better than the Scientific Atlanta stuff that is standard in my market), but the picture quality on HD channels is actually a little better on the component output than the DVI output. You might give the Moxi a try both ways, though, to see if the same is true in your case - if the two are comparable, you might even think about using the 1070's DVI switching to connect both the Moxi and a player like the Oppo Digital OPDV971H to the 1070 by DVI and coaxial digital audio. I suggest the Oppo because I've used one myself and been very impressed - for $200 and with a DVI or HDMI input on your TV (since the Oppo's upconverted digital is only available at the DVI output), it is a remarkably good piece of equipment.

As for the audio output from a DVD player, the only time that I would advocate using a player's onboard decoder would be for SACD or DVD-Audio (which in most cases require the decoding be done at the player to obtain the benefit of the high resolution audio). For DVD-Video, I always recommend using the digital audio output - not only is the decoder better in most receivers (particularly something at the level of the 1070) than in a DVD player, but you also gain the advantages of the receiver's bass management and additional processing modes (such as Pro Logic IIx, Dolby Digital EX, and DTS ES). Definitely stay with the digital audio output (coaxial or optical).