Component video is worth bypassing the convenience of your HT receiver, IMHO.
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Go ahaed and use the component connection - it is usually vastly superior to even s-video. The only problem you'll have is that now you'll also have to switch the TV inputs when you switch the audio source. Most folks would generally think that's a reasonable tradeoff, and if you have a learning remote capable of macros, you can even make a button that does it for you in one swell foop...
Even though my HT reciever does have component switching, I don't use it. Quality component video cables are relitively expensive. Why would anyone want to spend twice as much money (2 cables required to use receiver switching) and potentially get degraded performance? The inconvenience of having to select the video input souce on my TV is a reasonable tradeoff vs cost, degradation of signal quality.
Connect the DVD player directly to the TV via component cable and be happy! If you have a learning remote and MUST have the convenience of NOT selecting the TV input, configure a macro to do it for you.
I have the same setup that you do. Even though my AVR has component video input, I bypass that. I hooked up my progressive scan DVD player w/ Faroudja chip directly to my 42" plasma via the IXOS component video cable.
My AVR component video input has bandwidth frequency limited. The board inside the AVR is not the best.
To resolve my (or your) setup problem, I purchased a Sony Universal remote control, Sony RM-AV3000. I use the macro function as a single touch feature to program sequence. For example, the macro function 1 is to turn on the plasma, turn on the satellite decoder, and turn on my AVR. I need my AVR and stereo mode to watch TV since the plasma is an old unit, which does not have its own speakers. To turn it off, press macro function 1 again.
To watch DVD, press macro function 2. It will turn on TV, switch input over to component video, turn on DVD, turn on AVR, switch input of AVR over to DVD.
After finish watching DVD, press macro function 3. It will switch the TV input back to S-video, turn the TV off, turn off DVD, swith the AVR back to satellite mode, and turn the AVR off.
If your recess light is remotely controlled, this Sony RM-AV3000 can dim your light as you are about to watch a movie as well. If you press pause, it turns the light back up for you. Of course, you got to teach it. It is fast and fun to teach. Hit a button on one remote to transmit signal (teach) while hitting a button on Sony RMAV3000 to receive signal (learn). Labels on touch-screen can be renamed to match your original remote controls. Instead of having 5 remote controls, I now have only 1. My wife & kids like the touch screen on the remote. Some people do not like the finger prints on it. If that's the case, either get thin-film cover for PDA and trim it or get a PDA pen.
There are lots of awesome remotes outthere. Phillips, Marantz, Yamaha, and many others. Check out RemoteCentral.com
Just another thought, in case you decide to upgrade AVR as more component video inputs are needed, check out Authority Video switcher. It offers many models w/ auto detection feature so that no remote control is needed. The price is less than $200 -- much less than any high-end AVR w/ component video inputs.