HK AVR-1600 - To upscale or not upscale... that is the question

I have a Harman Kardon AVR-1600 receiver winging it's way to me to replace and extremely old Technics 5.1 audio only receiver. My setup is as follows.

I use a Macbook Pro unibody (MBP) with the display removed as my media server mounted just under the TV (looks very slick). I run a mini display port to HDMI cable out of that to my Panasonic TC-P50U2 50" Plasma HDMI input and a TOSLINK cable to my old receiver. Since my MBP is a 2009 version it does NOT output audio on the miniDP connection so I must run TOSLINK audio from it.

I run Plex software on the Macbook which points at my Mac Pro server in the basement that holds all my media. Right now almost all of my media is 480p (DVD rips) since I have not really started into te Bluray revolution yet

Right now I have Plex upscaling all of the 480p video to 1080p for the TV. With the AVR-1600 on its way I am doing a little advance research in how I am going to set this up. I will be using the HDMI from my MBP through the AVR-1600 and then AVR-1600 to my TV via HDMI. I will continue to use optical audio as discussed earlier.

My primary question at this point is whether the hardware upscaling offered by the receiver would be superior quality to the SW upscaling used by Plex.

I am a relative noob to home theater so any and all help or pointers is greatly appreciated.

Well that makes it an easy decision

Sorry I did soooo much reading before deciding to buy this I thought I saw a discussion about choosing to pass through HDMI or process it. A lot of that reading was in the official 1600/2600/3600 thread in this forum maybe I was reading about a 2600/3600.

So upscaling in Plex SW it is... Thanks for the quick reply. Much appreciated.

Thanks. I appreciate the quick responses. This won't be a big deal for me since the upscaling in Plex seems decent. I am pretty sure my TV would upscale as well.

I am still happy (in advance) getting this unit. I am not a high end user. I had originally bought a cheaper AVR 154 unit but it turned out to have defective HDMI switching section so I am returning it for a full refund. The place I got it from (Visions.ca in Western Canada) upgraded me to the AVR 1600 for $82 more which is money well spent in my opinion for the extra features of the 1600.