I know this is a review. However, I have the exact same receiver and want to comment plus ask a few questions.
I will test for a difference between HDMI and Toslink. I know of a difference with DD and PCM for LFE. However, I never noticed one w/ HDMI and SPDIF.
Component? Component is a nightmare with this receiver unless you run 720p and below. This receiver transcodes and upconverts 720p and below from all analog inputs (like you old school folks using composite and S-video) to 720p out of the HDMI output. There is no running component at 720p out to 720p. If you want component video out (i.e., you have a pre-HDMI display), you better run 1080i. For 1080i component in, it runs component out at 1080i.
Video processing? It uses Faroudja. So, of course it sucks.
$205? I paid less for mine as an open box at Fry's.
OSD controls? They only overlay when the video is 720p or below. There is no OSD for 1080i/p.
IMHO, the sound is good. It's nice and warm--HK style. Mine isn't taxed too much. It drives two Infinity P362's and a PC250. A Dayton Titanic MKIII 15" hangs off as well.
By the by, are you running the latest firmware?