Thank you for the feedback, So basically I will need to upgrade my old Sony Receiver to benefit the new DTS-HD and Dolby True HD sound.
So if I understand you the HDMI 1.3 receiver "Through" mode from my Blu Ray to the Receiver to the TV will not effect picture quality at all correct?
I just want to make sure I can get the best quality using HDMI cables, but not losing picture quality.
Yes, upgrading to a new receiver will give you the lossless codecs. I also recommend better speakers that can actually resolve the improvement in sound / make it audible. You can have the best signal in the world and it'll still not be great if your speakers aren't great.
HDMI in through won't affect picture quality, at worst it'll add some handshake lag to the equation which while annoying does not have any real effect except make you wait a couple seconds before the components are connected. Only activating the receiver's video upscaling modes would have much of an effect on picture quality.
Remember, this information is digital.
BDP decodes H264 and then sends a digital signal to TV right now for example - ie 11010101011 except way more complex
TV receives - 11010101011 and then decodes that into a color
adding a receiver to the signal path makes it :
BDP decodes H264 and then sends a digital signal to receiver - 11010101011 except way more complex
recevier receives - 11010101011 + sound
receivers sends - 11010101011 to TV
TV receives - 11010101011 and then decodes that into a color
that's how it works.