There should not be any problem connecting the multichannel analog outputs of the Pioneer DV-48AV to the corresponding set of analog inputs of your Denon AVR-1508, which Denon calls EXT. IN (as shown on p. 15 of the PDF manual for this receiver). You will be able to listen to multichannel SACDs that way. Although there are disadvantages, as pointed out above.
Edited remainder of message because someone else pointed out that the AVR-1508 has the strange limitation (although maybe not that strange for an entry-level model from the early days of HDMI) that it WILL NOT ACCEPT OR PROCESS AUDIO SIGNALS OVER HDMI.
So, to give a broad answer, your receiver "is NOT able to play this to its fullest potential" because of its lack of any HDMI audio capability, as well as lack of features that newer entry-level receivers have, such as auto set-up with a provided microphone, and room correction. I think you should consider a newer Denon AVR with HDMI audio, auto set-up, and Audyssey MultEQ XT. Specifically, I suggest these Denons:
(2011 models) AVR 1712, AVR 2112ci
owners thread: http://www.avsforum.com/t/1334369/the-official-denon-avr-xx12-model-owners-thread
(2012 models) AVR 1713, AVR 2113ci
owners thread: http://www.avsforum.com/t/1409431/the-official-denon-avr-xx13-model-owners-thread-faq
(current, 2013 models) AVR X1000
owners thread: http://www.avsforum.com/t/1465528/the-official-2013-denon-e-series-x-series-avr-model-owners-thread-faqEdited by Sonic icons - 7/25/13 at 10:40am