I have an ARCAM AVR 600 Picture degradation with cable tv--run through

I have spent considerable hours, trying to figure out if problem I have is simply a flaw in the Arcam avr 600
I only use it for switching between Comcast tv, DVD player, Turntable, CD/DAC unit, Hulu--
If I switch to regular TV---the picture degrades from 1080 P to 1280/720      ---TV is a Pioneer Elite 60"----I have checked against the Pioneer elite 60" tv upstairs (same unit)------when picture is simply running through the cable box, it is fine.  Perfect.  Same if I run downstairs tv directly into cable box---perfect picture.   
Of course, the point is I need a multi channel receiver for running all functions.   Amp, Pre amp, Phon Pre are all Conrad Johnson.  Vandersteen for fronts, center and rear speakers.

Ideas-suggestions????   I am about ready to simply chuck this unit and get something that works----again, as sound quality of unit is not an issue, as only using for switching amongst functions.   

If I need to replace to be done with this hassle----thoughts on replacement unit----that works!  Thanks for reading.