1. When the 807 is connected by all the speaker terminals (no pre outs) and Height or Wide or Surround Back is selected the sound will only come out of the selected speakers in the set up menu.
2. If you are using an AMP and use the pre outs for the 7 channels then use the speaker terminals (Height) on the 807 you will get sound from all the speakers. Meaning pre outs and the Height speaker terminals on the 807.
OK, I think I see the problem now, because you are mixing pre-outs with speaker posts. As sailort discusses a few posts up there is a confusion about the signal path from processing channels to the amps and/or pre-outs.
The problem is that the Onkyo 807 has ELEVEN speaker posts -- the standard five for front/center/surround, plus separate binding posts for rear, height, and wide -- but only SEVEN pre-outs (standard front/center/surround/rear).
The normal five channels (front/center/surround) have five amps dedicated to those five channels, and this of course works as normal.
Now, there are only TWO amps which will power one pair of those SIX binding posts (rear/height/wide).... the signal from those 6th/7th processed channels will travel to only ONE of those three options via the speaker binding posts.
But there is only ONE pair of "pre-outs" for those two channels... it is labeled "Surround Back" but I bet it simply reproduces whichever of rear/height/wide you have selected. I think that is what is causing the confusion here... even if you have "height" selected, there is still signal coming out of the "surround back" pre-outs.
So, for example, let's say you have 9.1 speakers configured -- 5.1 standard plus rears plus heights.... this is how I think it will work:
1. If you hook the nine speakers up normally to the speaker posts (no pre-outs), only seven speakers will be "live" at any one time, depending on which one you select in settings.
2. If you hook up the "heights" to the speaker posts, and the "rears" to the pre-out, and then select the "Height" configuration in the settings, the "Height" signal will come out of the "Height" speaker posts but it will ALSO come out of the "surround back" pre-outs.... so while 9 speakers are "live" and it sounds like you are getting 9.1, what is really happening is the "Height" signal is being duplicated, because it comes out of both the "height" speaker posts and also the "surr.back" pre-outs!
again, going back to sailort's points above, the problem seems to be this bizarre configuration where there are TWO pre-outs but SIX speaker posts... but they are all really controlled by only TWO channels of processing!