You could certainly set a unit up with DVI and digital audio to the Video1 input and component (or even s-video or composite) and six-channel analog to the DVD input and very readily toggle between the two modes in that manner, but it will tie up both of your DVI ports as well as two of your three component inputs - which could start to give you some headaches if you have more than a couple of source components. The other approach of routing six-channel analog and digital audio through the DVD input and using the 7.1D button to toggle isn't much more difficult, and it leaves Video1 open for other sources.

To avoid bass management in the Denon, simply set all speakers to large and make sure the sub is set to on. That will bypass the internal bass management.