Call me stubborn, but I don't like to give up...

So the individual rooms are independently controlled, meaning (I assume) each is switched on or off separately and has separate volume control. How is that done with a single 7.1 processor? All three rooms would have to share the same active source, and the only way to prevent one room from controlling the volume in the other rooms would be to freeze the main volume in a single position and control volume for each space separately at the Niles. At some point, it would seem more flexible to simply have three separate processors for the three rooms - especially since you'd already have amps for all of them if the Niles is located at the pre-amp outputs. That's just my preference, though, based on my tendency as a geek to want to tinker and my limited understanding of the system and how it is being used.

I agree that the best bet is probably to split the composite monitor out if you want OSD at both the second room and the equipment rack monitor. If you can do without OSD in the second room, you might try running a record out to that monitor and using the composite monitor out for the equipment rack.