If I understand correctly, you have only one 1080i input on your TV: the DTV input which can be configured for RGBHV (as it is today with your DTC-100) or Component Video (as it needs to be for your HD upconverter).
Here is how I see your connections:
DTC-100 RGB out to RGB/Component converter in (your new Audio Authority box or equivalent).
RGB/Component converter component out to Denon component in (#1).
HD Upconverter component out to Denon component in (#2).
Denon component out to TV DTV/Component in.
DVD Player component out to HD Converter component in.
Other S-video/Composite video sources out's to HD Upconverter in's (including their analog audio).
Now your Denon will select either component in #1 for DTC-100 HDTV, etc., or component in #2 for HD Upconverter. The HD Upconverter would be used to select between DVD, etc., for the items plugged into the Upconverter.
The audio for Denon component in #2 could be the combination of analog L+R from the HD Upconverter out and optical or coaxial diigital from the DVD player. Odds are, your Denon will automatically switch between analog and digital audio sources for the same input.
I don't know the details of your Denon system, but most Dolby Digital A/V systems would behave the way I have described (i.e., automatic selection of digital audio if available or analog audio if no digital signal is present).
Good luck!!