The living room AV system in all its latest gory...

The audio side of the system is shown here.
And no, that still isn't a typo in the heading... [last updated: 28 July 2010]

Blue arrows show hdmi (digital video and digital audio) signals. The multi-channel Audiolab 8000AP pre-amplifier (in addition to five stereo analogue inputs, plus a "5.1" set, and seven digital audio inputs) has two hdmi inputs,¹ from which it strips incoming high-resolution digital audio for processing,² while passing along the digital video — unprocessed — direct to its single hdmi output.

The (hacked/dongled) multi-region, multi-zone Oppo Blu-ray player incorporates a later variant of the VRS upscaling technology I had in my original (primarily analogue) video scaler. This squeezes maximum video quality out of standard definition DVDs by skilful upscaling to 1080p. (Even 1080p/24 if the DVD has been correctly mastered.) The Freeview and Freesat PVRs, although capable of doing their own upscaling, are both upscaled by identical technology in the DVDO Edge scaler. I almost never watch Freeview TV, however, as its quality (if that's the right word) is dreadful when compared with the higher bit rate³ transmissions via Freesat.

My chum Henry (the DVDO Edge supplier) has forthright opinions around the question of Edge versus Oppo Blu-ray for handling DVDs:

Naturally, the DVDO technical wizard from the Edge camp has a (slightly) divergent view. But he agrees with the basic principle: minimise video processing in too many components but do it right. With the DVDO Edge I regain aspect ratio control and picture control. The main ground is covered here (by Oppo) and here (by DVDO).

Footnotes

¹  My first micro-controlled audio/video switchbox — built to my design in 1985 by my late (alas, in two senses of the word — he delivered the unit at the end of May 1988, and he went and died in the mid-1990s) friend Colin — had four composite video inputs, an independent video recording bus, eight analogue stereo audio inputs, and two independent stereo audio recording buses. S-Video (Y-C) and RGB had hardly reached the UK back then. I recently (June 2010) discovered a letter (dated 28^th May 1988) that's relevant.
²  It decodes Dolby Digital and DTS 5.1 formats, but relies on incoming uncompressed decoded LPCM multi-channel audio data to handle the fancier surround sound formats that now exist. However, in July 2010, I decided to revert to simple stereo — hence the Rotel power amplifier. (I may yet add back in a mono amplifier to drive the centre [dialogue] speaker, but I'm in no hurry to do so.) The Oppo Blu-ray player outputs a perfectly acceptable analogue stereo down-mix from any surround material, and can also deal comfortably with the LPCM 2-channel material that some DVDs and Blu-rays offer. (Test results linked from here.)
³  I expect Freeview terrestrial digital quality only to get far worse, too, when the idiots in charge succeed in putting their five high-def national channels on that limited bandwidth platform. Unless we all equip ourselves with full spectrum high-gain aerials.