I was at circuit city the other day and they told me not to output my Directv through HDMI but use component because the component would use my Television's processor to do the upconversion for standard definition rather than the HR20 Directv box

is that true?? When using HDMI am I really just having my television upconvert the signal and not the box ?

Also what if I use an av receiver for the upconversion let's say a denon 2808 or 3808 will I get a better picture if I go through there using either HDMI or component cables and scale it to 1080p?

Im confused

No, that would depend on your settings. Typically the only thing that will happen, unless your STB is set to upscale to 720p/1080i for you, is that the 480i video will be deinterlaced to 480p (this is actually frequently necessary for compatibility reasons - the bitrate of 480i video over HDMI is actually *too low*, which can cause problems with a variety of TVs, and deinterlacing corrects this). 480i/p over component and HDMI should look indistinguishable, and you can still have your TV do the actual upscaling if you wish.