If I am not mistaken, HDMI pass-through means that it can act just as a passive switcher without doing anything to the signal. Frankly, I don't see much point in that, as you will probably want to extract the audio from it, in which case you will not be using it as pass-through.
The HDMI pass-through simply means the video portion of the signal is not altered by the internals of the receiver. Audio can still be handled by the receiver.
The 663 will pass a video signal from s-video, composite, component to the HDMI connection. It does not "improve" or "convert" signal in doing so. Also, only specific video formats are passed into the HDMI. Not all of them. The common video formats are handled with no problem. It's the
old video game formats that pose problems.
I believe the newer version of the 663 is actually the 765. The 663 is a fine piece of equipment.
I've attached the manual page with a short synopsis on it.
-pat