Thanks everyone for the help. I have been in contact with Yamaha Tier 2 Technical Support. They stated that when they hook up their lab A710 with a composite signal then output through a HDMI, they get no brighter blacks and in fact have a better picture quality going from a composite input to a HDMI output to the TV, than from a composite input to a composite output to the TV. So they definitely said my conversion circuit is defective.
I also have started to see a few other issues as well. When I use a composite input that goes through a HDMI output to the TV, now I get occasional HDCP incompatibility where the receiver error screen says to use component outputs. This is only with the analog composite inputs as if the conversion is also screwing up the HDCP signal in the HDMI connection.
Also with all HDMI control turned off in the TV and the Receiver, I'm still getting some type of control when I shouldn't. My cable box HDMI audio output to the Receiver is getting shut off momentarily when I shut my TV Off, then the signal comes back. I listen to the music channels so I do use my cable box without the TV on. With all control circuits off, my TV turning off shouldn't shut off the HDMI signal from the cable box.
Once again this receiver when converting a composite signal to a HDMI, washes out the blacks and picture, while going from composite input to composite output to the TV is perferct.
Now I found these issues above along with the corrupted black levels from analog to digital conversion.
I also have a problem with my cable box, a Motorola DCX3400, which seems to be a problem with most A/V receiver. It changes a preset or native resolution to a pushed 720P resolution for 16:9 content and 480P for 4:3 content. IMO, this isn't HD but mid-def so I'm pretty upset about this since it doesn't happen running the cable box straight to the TV. BUT as I said, I have found tons of information on the internet about this being a problem with the Motorola box. Unfortunately there doesn't seem to be a solution. So now I'm losing my HD picture quality because I'm using this receiver, regardless if it's the fault of the receiver or not.
I'm willing to give this another try with either another A710 or a Denon receiver, but I want to make sure from everyone here who owns this model or even a RX-V671 similar model, that this isn't just a design flaw with this receiver. Everyone has been helpful but doesn't seem like anyone has actually commented directly on my problem. So with the additional problems I found, I'm also wondering if these are common or just a problem with my individual receiver.
If this is just a design flaw with the Yamaha receiver, and I can't get the dealer to come down to a price I can afford on a Denon AVR-2312CI, I'll just go back to my Denon AVR-3803.
Thanks again everyone for the help.