Well, in my opinion, if you want the best picture possible, don't go through a receiver. Get an hd cable box and connect video directly to tv. Don't use a receiver to upgrade your picture.
I have hd service from verizon fios with a sharp aquos 32" lcd hdtv. Awesome hd picture, and standard def channels come in at 480p, and still look good.
I bought a yammie 2600, connected everything thru hdmi cable and the picture was worse. Even if I set the receiver just to pass thru the hd signal, the signal was still worse than when it was connected directly to the tv. I then returned the yammie and got a pioneer elite vsx82-txs and the picture quality was still worse than the yammie.
In the end, I kept the pioneer, kept renting the hd cable box and just used the receiver for sound.
You may want to try one of these, it may be a cheap way to improve your picture quality. I never tried one.
http://www.dvd-gear.com/video-scaler-for-hdtv-dvi.htm