HDMI is pass through only.
I actually have the RX-V1800 model, (and the snips below are from the 1800 manual)
but I'm pretty sure the RX-V863 is the same in regards to scaling/transcoding.
For an XBOX 360 user, the 863 offers nothing over the 663 in regards to upscaling/upconversion for Gaming,
unless you wish to play a SD DVD movie at 480i/p in your non-Elite 360 and want it upconverted and upscaled to 1080p over HDMI.
That can only be done with the 863/1800, not the 663.
I have had an RX-V661, and most recently an RX-V1800
and thats the only difference in regards to resolution/scaling.
(All my toys are HDMI except for my non-Elite 360)
The same findings would come from a 663 vs 863 comparison.(for an XBOX 360)
BTW, Do you have an Elite 360? I was sure my non-HDMI 360 maxed out at 1080i over component...although I've heard it could do 1080p over VGA.
...couldnt be bothered anyway, I use my PS3 almost exclusively now.