output to HDMI cable from non-HDMI receiver?

As a slowly recovering audiophile and neophyte about video, I'm putting together a new home theater ... but want natural, musical sound. Therefore, I like the idea of used B&K instead of mass brands. However, no HDMI capability with the B&K. Questions:

1. Is it possible to run video sources into the B&K receiver, then output to a switching device that in turn outputs to HDMI cable, sending the video signal to my TV? (audio signal will come through speaker wire from receiver).
2. Will I lose any sonic quality of digital sources by using RCA's vs HDMI cable for audio?

Thanks!
Stuart