I've noticed an interesting trend out there. People want to use their AV Receivers for what their name implies. To receive all Audio AND video front-end signals. To be the main hub of audio AND video signals.

Well, if the video part implied only mechanical relaying, it would still be a signal strength loss.

But nowadays people are feature-hungry, and want composite and S-video transcoding to component video, not to mention upconversion of analog to HDMI 1080P.

All these mean lots of circuitry and componentry, and, in the case of upconversion to HDMI, special mathematical video processing in the digital domain, after analog-to-digital video conversion.

Now think of what such a receiver has to pack inside:

Analog to digital video convertor plus deinterlacing including 3:2 pull-down processing if 1080P HDMI gets out.
Analog to analog video transcoder if analog component gets out.
ADC converters for analog audio inputs.
DSP for audio, for bass management and speaker delay.
8 DAC converters (at times included in the DSP chip).
8 audio preamplifiers.
7 audio final amplifires.
Self-calibration circuitry and room EQ in digital domain.

And we want to pay under $1000 for all this!
Something has to give. By no means all of these may be achieved at the price tag while preserving quality across all features.

That's why I strongly believe that one should focus on the part what matters most, the audio quality. Audio, that Dolby surround for movies and SACD and DVD-A for music, is the main reason AV receivers are out there. Otherwise, a simple stereo integrated would do.

I believe than any decent 1080P TV set might pack inside a better upconversion circuitry than any usual AV receiver can provide.

I believe that if your analog video front end outputs composite video or S-Video, passing that signal "as is" to your TV would be the better choice.

I understand, having the AV receiver output only one digital cable to your digital display will look neat and cool. This might be the only way if your digital display is only a monitor and not a TV set. But if it's a digital TV, I bet that the transcoding and upconverting circuitry inside the TV is better than the one in a moderately priced AV receiver.

Put your money into the audio quality of the AV receiver, for which you have no substitute, and let the video part be handled by the components dedicated to video, if they exist.

Of course I might be wrong and I'm welcoming any other opinion that might "straighten me up".