I had imagined sending everything through the receiver before going to the TV, but I guess I hadn't realized that I could just send all the A/V (HDMI) to the TV and then use the digital out from the TV to get back to the receiver for the audio. I don't think that should hurt the signal as it is staying digital. The Airport Express could go straight to the receiver or I could just get one with built in networking.
In that case, I should start looking at decent stereo receivers and could even go the used route since I don't need the latest decodings and streaming capabilities, mostly used for surrond sound. Thanks for the suggestions so far.
In terms of sources, my only pure audio (non-A/V like PS3) sources are the Airport Express and occasionally, straight from an iPod. I guess I'm too young to have a dedicated CD player or turntable.
The only source I have that doesn't allow simultaneous analog audio out is the Boxee TV as it's only connection is a single HDMI cable so I could live with analog only. But life would be much easier with at least one digital in for the TV audio return so that I don't have to switch inputs on the receiver and the TV each time, and deal with greif from my wife, the current setup is not exactly user friendly.
@KEW
I had put the Denon 1712 towards the top of my list for the A/V receivers, along with the Marantz 1413/1613 (good sound quality) and one of the Onkyo's (lots of features). I will keep that option open, but start looking at stereo too.
I do also like the ability to have room correction built in, I have not gotten that far in my audio leanings and the wife would certainly object to most room treatments.