Setup good enough for optimal HD A/V?

Just purchased a Panasonic TH42PZ85 Plasma a few weeks ago and connected it to my old Sony upconverting 1080p dvd player. I thought I could get away with it till the holiday sales (on blu-rays) but I cant take the poor video quality anymore. I'm now looking for a blu-ray player but not sure what brand model to get since they all are priced pretty similar. Ive also read about True HD audio and wonder if my somewhat new Hk AVR-147 can make the most out of the format? I read the manual and it states that the hdmi ports only switch video and doesn't process audio/video. If I use the blu-ray analog outputs and connect them to the Hk inputs, will I get the best sound quality possible from the blu-ray experience as I would if I used the hdmi? I hope I don't have to shell out more cash for a new receiver that can process it. I thought the only reason for Hdmi cables was to handle both a/v (less cables clutter) right? Isn't it the same as using a 6 channel analog setups? Man...I got such a headache from this topic..lol

Sorry for being such a newb in the HD department, but buying the new LCD and Energy speakers setup got me pretty hooked for wanting the most use out of them. I put a lot of effort in my new setup (avia calibrated tv and speakers, carpeted the family room, new drapes, painted walls grey, new lighting, better gauge speaker wires, banana plugs and a/v cables all replaced with monoprice.com products. I could have payed someone to do it all for me but I like to learn and try to do things on my own for the most part, plus it's good for the wallet. I've used avs for sometime and learned more than I would anywhere else. Thank you for all your help, I cant wait to finally have it all dialed in.

Did a lot a research about TRUE HD and it seems that I have to buy a new receiver to get that feature. I cant really shell out over 600 bucks for a new receiver at the moment, so I guess I have to wait...

Yah that's a real high end player, the stats and capabilities that the Denon can put on the table is amazing....but that would explain the big price tag as well. Since the digital world advances fairly fast, would this particular model keep up for the next few years? The price would be reasonable if it has strong stats to last a few years, I would consider it actually. Any views on the Denon 3800 being replaced with a new model anytime soon?

I was originally looking at the Sony 350, then I read a few forums talking about reon processor being favored mostly. Some Samsung's had good reviews but I haven't had much luck with their past dvd players. Not a big Sony fan either but it seems like their pretty strong in the BD department? I've been comparing Sony, Pioneer, Panasonic, Samsung and Denons and still cant pick em down to a few (best bang for buck). I'm looking at spending below 500$, then wait it out after the new year for the more updated BD players. By then they should have better decoding and reasonable prices. The only prob is my Hk 147 not able to decode so not sure what route to take first. I have a Energy C series speaker setup that can take more power, so I could possibly invest into a better receiver that Decodes TrueHD and DTS-MA instead?