HDMI 1.2 repeating and HDMI 1.3 pass thru aren't better or worse than one another, they are just different. Look at it this way. Different HDMI versions allow additional material through the wire. The higher versions allow for more flexibility. The only point I would see in HDMI 1.3 pass thru is if you had an HDMI 1.3 source and HDMI 1.3 display that supported Deep Color (which is unlikely). I will admit, I don't know if there is an HDMI 1.3 display available that supports Deep Color and I am farely certain there is no consumer media that is Deep Color ready.
HDMI 1.1 allows up to 5.1 channels of linear PCM to be passed over HDMI along with legacy Dolby Digital and DTS formats. HDMI 1.2 adds DSD streaming ability and 7.1 LPCM I believe. HDMI 1.3 allows bitstreaming of HD audio formats such as DTS-HD and Dolby Digital TrueHD. These audio formats are only available on Blu-ray and the now defunct HD DVD.
If you get an HDMI 1.3 pass-thru receiver you won't get the benefit of HD audio in any way, because the signal just passes through the receiver to the display (which won't be able to utilize the HD audio it is receiving).
If you get an HDMI 1.2 repeating receiver you can have the Blu-ray player decode the bitstream audio internally and send the receiver an uncompressed multichannel PCM signal over HDMI (there is no audio quality loss by doing it this way). If you had an HDMI 1.3 Blu-ray player (other than the PS3) and a HDMI 1.3 repeating receiver, you could send bitstream HD audio (Dolby Digital TrueHD or DTS-HD) to the receiver over HDMI and all decoding processes would occur there.
The argument for owning an HDMI 1.3 repeating receiver is this. First, it shows on the display of the receiver that the HD audio format is being decoded. This gives users the piece of mind that they are getting HD audio and they can show all their friends the new TrueHD logos that light up on the display "Woopie!"
. Second, having a receiver with HDMI 1.3 repeating architecture insures that the owner will be able to get the HD audio from Blu-ray if and when Blu-ray players no longer have the decoders built in. This could apply if your current Blu-ray player decides to take a dive and you have to replace it. If the new Blu-ray player you get to replace it does not have internal decoders and you have an HDMI 1.2 repeating receiver you can't utilize the HD audio formats.
Argument for the HDMI 1.2 repeating, or simply using LPCM instead of HD audio bitstreams. Blu-ray players have interactive features and some of them can be used during movie playback. If you are watching a Blu-ray movie and you decide to access the menu to watch commentary while still playing the feature film you can get both audio tracks to run at once. The audio tracks include, the movie itself, the commentary, and the menu sounds. If you bitstream the audio to a HDMI 1.3 receiver the additional audio tracks will not be heard, only the one of the feature film. The reason for this is the decoding for simultaneous audio tracks is handled inside the Blu-ray player, it is currently the only way it apparently can be done. If this remains to be the case it's very possible that we may never see a Blu-ray player that can't do internal HD audio decoding.
I hope this answers any past, present, and future questions you might have, and sorry for the long post.
