My folks run a dish network 322 as well as an OTA antenna. The 322 used to easily integrate the local channels via OTA until a few months ago ( I am guessing when analog broadcast went south), Does this make sense? Does this 322 include digital OTA or just analog?

Does this 322 include digital OTA or just analog?
Just analog.

Since the 322 doesn't actually have any OTA tuners built in (analog or digital), I'm assuming that they were just passing the antenna signal through the tuner and using the TV's analog (NTSC) tuner (there is an RF pass-through feature on the 322).

If the TV doesn't have a digital OTA (ATSC) tuner, they'll have to add a CECB (standard defintion ATSC tuner).

See the "CECB" sub-forum here.