I have an Onkyo receiver, about 5 years old, but the 6 series. It has front panel buttons for selector and an infinite volume knob, for which you look at the display for the numerical volume level. You can still "find" zero by turning to the left a good healthy turn, I think it is speed sensitive, if you turn it fast it gears up the rate of change. It is 6 channel, but later 6 series are 7. It was $500 when I bought, I thought it was the best deal at the time, and I have owned Onkyo stereo receivers with good results previously. The sound is good in direct pure mode which bypasses all processing, but also defeats the sub. The stereo DAC is shit, but tolerable in pure direct, but the Dolby surround DAC is pretty good. You would have to experiment with the best way to get stereo music into it, but analog ended up being best for me - stereo only. For movies/TV, toslink sounds great. You'll want to use bananas on the speaker connections. My 75wpc is plenty for five 8 ohm deftech speakers.
HDMI will only carry video, no sound at this price range, or until 1.3 is the norm. Technically there should be no loss from switching HDMI at the rx, but YMMV. It is handy to let Rx switch video with audio, so one less remote to deal with or reprogram, but with analog switching has always led to worse picture at this price range. Digital should be better. The onkyo remotes are great, easily programmable to eliminate several remotes, and has macros too. Look for macros programmability on the new versions Jim, that might be valuable to you, just turn on and press one button on remote to switch everything as needed, even muting.
Have fun!
Rich