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1. Will I be able to hear audio from all my speakers if I send the audio out form the Panny via the analog ports? Does this have any thing to do with lossless audio.
It sounds to me that you are using a stereo hook-up and having the RCA HT system run Dolby ProLogic II (turn stereo into "fake" surround). And that's fine, you said yourself you are no audiophile (neither am I truly, heh). With that being said, yes, if you ran stereo out of the DMP-BD70V and fed it into the RCA, or if you used a digital optical cable, you would be able to hear what you are currently hearing via your current DVD set-up. I would think you'd simply replace the DVD player with the DMP-BD70V so, yes, all will sound exactly as it does now if you did that.
As for lossless audio, a big feature of both HD DVD and Blu-ray is the ability now to have true lossless audio featured on the discs. Dolby TrueHD and DTS Master are just a few of the lossless choices nowadays. The sound on DVDs is inherently lossy by nature. But, again, you do not have the equipment to take advantage of these new audio codecs and, as you've said, you aren't an audiophile to begin with so no worries on that end at all. Just forget I ever mentioned it

Feel free to ask any other question you may have. That's what this board is here for.