Video quality worse through AVR???

I just got my home theater set up on Friday. I'm running PS3 and Moxi DVR (Charter Cable) through an NAD T747 via HDMI, and Wii via Component video.

I watched just a little HD television, a little Wii, and almost no Blu Ray before getting the receiver, so I don't have a great baseline. . .

HOWEVER, I would swear that both the HD cable and Wii look WORSE running through the AVR than they did when I had them directly connected to the TV. For example, watching the Discovery documentary Life last night I noticed blurring when there was fast motion, such as a Cheetah running. And during newscasts where a graphic runs along the bottom of the screen there was some fuzz in the reds and whites along the edges. The Moxi DVR menu looks "stair-steppy" in places and the Wii just doesn't look as sharp (obviously it's a lower quality source, but it seemed to look better before running it through the supposedly up-converting AVR).

I'm going to try to compare them more directly tonight, but can you tell me whether it's possible (and, if so, how likely it is) that my receiver is making my picture quality WORSE? If it's going to make the picture worse should I just run audio to the receiver or buy a better receiver?

What do you mean by two cables? [edit: I see what you mean now, one cable from source to AVR, and another cable from AVR to TV...thanks...of course, they're both really short runs, if that could make a difference]

As for turning off scaling, I can't figure out how to do it b/c the video settings only allow you to set the highest resolution your TV allows. I don't see a way to apply different video settings to each source. Maybe it's just a limitation of the NAD?

Funny, I actually did buy it for its audio quality but I expected the video quality to at least be a "zero" rather than a "negative".

So if I turn off scaling, then theoretically the HDMI signal will simply pass through the AVR and the television will deal with it? So I guess the problem with the cable is that it's 1080i native and the AVR is (poorly) upscaling to 1080p (and same for the component-video Wii)?

Thanks!

I think I may do what you suggested and run the cable directly to the TV and optical audio. It's not as if the cable has lossless audio anyway, and my wife would love not having to operate the receiver in order to watch TV.

Thanks for the help!

Also, thanks for clearing up the language on scaling/interlacing.