Don't mean lowest-priced necessarily, although that would be a bonus. I mean an AVR that has all the features I need AND implements them well, which in turn means (1) quality, in both V and A, and (2) good user interface, which to me means fewest glitches, good durability/reputation, build, etc.

First, it should accept component video and send it out via HDMI. I will be using component out of an XA2 for HD video but for unrelated reasons I can only send HDMi/DVi to the projector.

It should accept HDMI (is 1.3 important? After doing some reading, I guess not) and output the same via the same HDMI as above, with easy switchability. This for upconverted video of SD discs from the XA2.

OSD is a strong desirable though ultimately not a deal killer. The gear is in a closet so I do not have direct view to it.

Therefore, looks are not as important as they might be otherwise. But it would be better (not a deal-killer if not, I think) if it didn't run extremely hot.

Good sound quality-- good enough to moderately satisfy an audiophile (although I won't be applying audiophile standards here, and will rarely use it for music, as I have a dedicated system for that).

That's about it. Really don't need a lot of frills but many of them will be there, I know.

Would like to spend under $500 for now, as my AV budget got blown a little bit with the PJ and XA2. Maybe upgrade next year...

Used is ok, sometimes even preferable and that is how I do a lot of my audio. But I know in AV land, used usually means obsolete, and I don't want the latter.

Please pitch in with your ideas.

Onkyo TX-SR605. The only problem is that it down converts a 1080i component input to a 720p HDMI output. So if you can live with that go with this unit. And yeah it has 2 HDMI 1.3inputs which may not be useful at all right now but I still have a receiver from like 10 years ago so I might actually have my new 605 10 years from now and it might need the 1.3. With the onboard decoding of Dolby Digital Plus, Dolby TrueHD and DTS-HD you are pretty much covering yourself for the future. The other bonus is it comes in either silver or black.

Using this JVC 7.1 digital receiver and I'm very pleased with it's performance and compact size.

http://www.circuitcity.com/ssm/JVC-Surround-Sound-Receiver-RXD401S/sem/rpsm/oid/140195/catOid/-12949/rpem/ccd/productDetail.do

Under $500 and you get an extra 10% off if you belong to AAA.

Features include:

JVC Surround Sound Receiver (RXD401S)
Powerful sound: This JVC A/V receiver delivers an awesome 110 watts per channel, bringing all of your music and movies to life with clear, powerful concert-style sound.

7.1-channel surround sound: Wrap yourself in full, rich surround sound with this 7.1-channel receiver.

HDMI connections: Get crisp, realistic digital images and detailed sound with this digital A/V interface. Offering you the convenience and performance of HDMI up-conversation, the JVC RXD401S lets you connect your components to the receiver with just one cable.

USB-PC link: Connect the receiver to your PC via the USB-PC link, and you’ll be ready to groove to all your favorite digital tunes.

Enhanced audio: Get the best sound from your favorite music and movies with Dolby® Digital EX, Dolby Digital, Dolby Pro Logic IIx and Dolby Pro Logic II decoding. You also get enhanced audio from DTS®, DTS-ES, DTS Neo:6 and DTS 96/94 decoding.

CC converter: JVC’s exclusive dual-mode CC converter improves the sound quality of compressed audio and non-compressed sources. This assures that you get the clearest, sharpest sound possible.

Virtual surround back sound: Creates an even wider sound field without a surround back speaker.

Wide range of connections: Enjoy top-tier performance from HDMI connections. A Genesis deinterlacer, using technology from Faroudja, handles HDMI up-conversion. Component, S-video and composite connections offer lots of A/V flexibility.

Special features: Center channel alignment, 3D-PHONIC, quick speaker setup, one-touch operation and DSP digital equalizer.

Thanks... how does one get/use an AAA discount?

Thanks... how does one get/use an AAA discount?
slickdeals.net. Thats how I got a 10% off coupon fronm AAA and bought online then brought a different 10% off coupon that I printed out and was able to use that when I did in store pickup:D. I know its cheating but I actually got 20% off a 32" LCD tv that way

I second the Onkyo 605.

Sony STR-DG1000...and it has the 7.1 preouts (605 doesn't) in case you want to use it as a pre/pro in the future.