Running the video to the receiver gives you the convenience of allowing the receiver to switch among multiple video sources so that you never have to switch inputs on the tv. If for example, you have a dvd player and a cable box connected to the receiver, you would need only one connection to the tv. Switching from dvd to cable will switch the picture on the tv without you having to switch the input on the tv. If both were connected directly to the tv (but audio going thru the receiver as it always should), you would have to change the input on the receiver and then also change the input on the tv.
Additionally, many receivers can convert from one format to another. If the dvd player is connected using component cables and the cable box is connected via composite or s-video, a receiver that can upconvert to component will allow you to use one component connection to the tv regardless of the fact that the two video devices are connected using different formats.
Most receivers provide at least 50 Mhz bandwidth for video switching which is more than adequate for preventing any kind of signal degradation. However, converting from composite (or s-video) to component will not improve the signal in any way.