Thanks for the tips. I'll check out the Onkyo. Some people have described it as a bit shrill, but the price is outstanding.
As for the AVR idea, that was my first thought, but I'd rather not go that direction because (a) I want something small in size, (b) I only need 2 channels of amplification, (c) it would be simpler for my kids to operate if the TV did all the source switching and they only had to use the amp to change the volume, and (d) I find the HDMI source switching in my main rig to be a bit glitchy (I have an Anthem AVM-50v).
I suppose I could also get a very small integrated amp and small DAC, like the MF V-DAC, and run the optical out of the TV. I'm mostly interested to know if the TV will degrade the sound materially.