Need some help

Hello all,
First nice site. Second i am not new to this site tho this is my first post. I often read your forums and take in information from your posts. Helped me decide on key units in my home theater.

So ok this is the first ive been unable to solve a dilemma on my own. Iv never encountered this before, so maybe everyone here would know.

I recently purchased the Pioneer SC 1525 K (That is, the SC 35 in US).
Phenomenal receiver. But I have encountered an issue.

first let me explain how I hook things up:
I dont believe in using receivers video processor to send picture to my T.V.
I usually send my HDMI cables directly to the T.V. and sending a separate (coaxial or optical digital cable) to the receiver to process the sound. That way i avoid any video/sound degradation.

However...

My xbox 360 has changed that. When i plug the HDMI cable into the 360, i cannot utilize the optical out (unlike its superior counterpart, PS3). Therefore i Have 2 options:

Option 1: I hooked up the 360 via HDMI to the T.V. and use the optical out on the T.V. to the receivers optical in, thus horridly degrading the sound.

Option 2: I Hooked up the 360 up via HDMI to the Receiver and then used a HDMI out from he receiver to the T.V. thus using the receivers video processor to sent the picture to the T.v. (which i have surprisingly found with this receiver, there is no degradation in the video.)

Option 2 has worked the best as neither sound nor video is degrading. But a problem has occured, and i cant find a way out.

When i use my Pioneer remote to turn down the volume, BOTH my receiver and my T.V. volumes change. My T.V. should not be moving as well.
And of course, visa versa when i use my t.v. remote, it will control BOTH units volumes.

This is irritating because i DO NOT use my t.v. speakers at all. So seeing a volume bar accross my t.v. when i adjust my receiver volume is .. annoying.

This ONLY happens when im on the 360 channel (HDMI 5) and using the receiver as the middle man.

My T.V. Is the Sharp Aquos LED 46"
And again my Receiver is the Pioneer SC 1525 k (Sc 35)

Any suggestions would be GREATLY appreciated. Thanks

Ok just to update:
theres an option called "Aquos link control"
by turning that off, is got rid of the remote issue.

However, i kinda liked that cause whenever i would turn my T.V. to the channel my PS3 is on, it would turn on my PS3. Now it wont do that with link control off...

But if link control is on, the remotes control both units..

360 still a peace of crap =p

Its not just picture degradation or quality. Sending high definition video signals through your receiver WILL put a strain on the receivers processor. Its not a question of weather or not it can handle it, its a question of heat accompanied by unnecessary use = damage?

I mean, there's a reason t.v.'s have multiple inputs.

But thanks for the link. I might just pull that plastic crap apart. Again, Thank you. =)

oh totally agreed. xbox live is far superior to the PSN.
In terms of system build quality, sound and video output, as well raw system power, no contest.
PS3.

Also:
I turned the Aquos link back on, and the remote issue hasn't returned.
How does that work??? It was giving me the control issue before where 1 remote was raising both volumes, and now the issue is gone... o_O
*sigh*