Analog HDMI
To answer the first question, the new Denon has the ability to input analog video signals (composite video, S-video, conponent video) and output them over the HDMI connection. This wont necessarily improve the picture quality of the S-video signal from your VCR, but it will allow you to have a single HDMI connection from the receiver to the TV.
The new Yamaha RX-V2600 and 1600 also have this feature.