Snodog, even though the Blu-ray will decode 7.1 and send it via multichannel analog you will still need a preamp that has 7.1 analog inputs. HDMI is supposed to pass all the HD formats and technically in may be able to but according to the Dolby website no disc will allow this to happen and it's iffy whether they will. The movie soundtrack has to be encoded to allow the digital bitstream to pass by the internal DAC and let the receiver/preamp decode it. To avoid any pitfalls and be assured of best set up I'd recommend just going with the 7.1 analog. Blu-ray and HD-DVD discs still have the core Dolby Digital or DTS audio encoding so there really isn't any reason why you couldn't use an existing digital input except the sound quality would be inferior to the analog due to analog being uncompressed or at least less compressed.