You're right, most either don't convert HDMI, or at least give you the option of pass-through. The AVR-x54 series doesn't have this option, which is why people are complaining.
As to each source having its own output resolution, you're probably right. I wrote my reply from work, and wasn't in front of my AVR. I couldn't remember if it was set for each source or globally, but I'm sure you're right. Still, I'm not sure WHY you'd want to have 1080i sent to your TV if it supports 1080p, unless, as the original question asked, you're hoping for a pass-through. Since that's not happening anyway, I'd probably just set both to 1080p, and be done with it.
The question about whether the video-mode "off" setting is working or not is leading to a lot of misunderstanding. Yes, the Video-mode "off" setting is working, meaning it's not applying extra brightness, contrast, and saturation settings to the picture, as the other modes do ("film," "sports," etc.) Too many people are confusing this with resolution scaling. These are two separate settings, and two separate things. Having the mode setting off, and having that NOT affect the scaling, doesn't mean that the mode setting is "broken." Now, claiming that the video processing is still killing "blacker-than-black" abilities... that's a different story. If that's indeed true, then video processing may indeed be happening if the setting is off, which would indeed indicate that it's broken. We just have to make sure we're comparing apples to apples here.
I'd love to see the ability to have the output resolution match the input resolution, but that doesn't seem to be on the horizon; and to think that they'll turn off "processing" altogether, meaning a true pass-through, well, that would kind of kill the onscreen overlays, and I'd bet that they're not about to do anything like that.