Hello everyone. I'm new to the HDMI world and had a few questions about my setup. I just recently purchased a new panasonic plasma HDTV (TH-PZ5080U). I already owned a KENWOOD VR-507 receiver (I know I need to upgrade this, but trying to replace one piece at a time). I also have a motorola DCT3416 HDDVR box with HDMI cable, and about to purchase either a blueray player or an upconversion dvd player (either one will connect via HDMI).
Currently I have my DCT3416 connected via HDMI cable into HDMI1 on the TV. I will connect my new DVD player in HDMI2 on the TV. I then have a optical digital cable plugged into the audio out on the tv, and it then plugs into the optical digital audio in on the VR-507 receiver. The VIDEO3 optical digital port doesn't work for some reason on the receiver anymore, so it's using the CD/DVD optical digital port.
So right now I am just keeping my receiver on CD/DVD for sound, and switching my video through the television. This way I can still get my surround sound for all video sources.
My question is, am I losing the true source audio for my DVD player or my DCT3416 box by setting it up this way? Is there going to be any degradation at all sound wise?
I'm looking to replace my receiver with a ONKYO TXSR606, but don't want to shell out the 379.00 for it right now since I just bought the TV.
Any help/insight would be greatly appreciated.

I go with a separate optical cable from the DVD and DirectTV receiver directly to the AVR and bypass the TV.

Wasn't clear if you have 2 optical ins on your AVR.

Not sure if the TV modifies the signal or just passes it through.

Unfortunatly my reciever only has two optical digital inputs, and one of them no longer works for some reason. So that leaves me with only one to use.