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Quite a thread title, I guess. Perhaps I should subtitle it, "or how I learned to stop worrying and love the bomb... I mean, theater." 
As the title says, I've added HDMI 1.3 audio decoding to my home theater, centered around the Parasound C1 home theater controller. As you all likely know, the Zhd adds HDMI switching (up to HDMI 1.3) to the C1/C2/7100, but not HDMI audio reception and decoding. It's highly likely that Parasound will not be adding this capability, instead producing a new pre/processor with HDMI audio sometime in the future.
So in the meantime, to get HDMI audio, all of us owners have the choice to either scrap our Parasound controllers and go with other new products, or create a stopgap solution. I've done the second, and imagine I'm certainly not the only one. (there are EXTREMELY few good quality HDMI audio pre/pros out now) I looked to add an outboard HDMI audio decoder to my C1. The cheapest thing I came up with was the lowest-end HDMI receiver on the market. So I got the new Denon 2808ci HDMI receiver, really only to be used as an outboard HDMI decoder, not using the amplifier or any other sections. To still have fully automated HDMI input switching integrated with my C1, and 5 inputs, I'm also using the Zhd. Sources are a HD-A35 HD-DVD player, PS3 gaming and BD player, Parasound D3 universal disc player, and two DirecTV HD-DVR's. You can see all equipment below in the rack--Denon 2808ci is right above the C1.
Video path is HDMI audio and video out from the sources, switched by the Zhd, then HDMI out to the Denon 2808ci. From there, the HDMI video is output to my theater front projector, staying HDMI 1.3 compliant the whole way. For audio, all sources are capable of HDMI audio, and the HD-DVD and PS3 are 1.3 capable. So the audio goes source, HDMI to Zhd, HDMI out to Denon 2808ci, then decoded and sent out to multichannel analog pre-outputs to the C1 multichannel inputs, then sent as normal to my Parasound amps and speakers.
One question would be why this is advantageous, when many HDMI sources offer the capability to do decoding in the source and send via multichannel analog outputs to the pre/pro. Well, first, this keeps the signal digital as long as possible, (same reason you used digital coax/optical on your old DVD player instead of analogs) although the last bit from my Denon 2808ci to Parasound is analog. (of course, not as good as having the HDMI decoding right in the entire pre/pro) Second, the C1/C2/7100, like many other pre/pros, intentionally does not do any processing on the multichannel input source--it's just straight pass-through to keep the signal as pure as possible. Nice, but this means that bass management and such must all be relied upon inside your HDMI source, which is limited, if not non-existent. Using the Denon as a decoder, I can not only do bass management, levels, etc in the Denon, but also apply the Denon Audyssey processing for room processing. Best of all, I can apply the DPL IIx processing that I like so much, making every source a full 7.1 sound, regardless of the origin audio format, from mono all the way up to the new perfection DTS-MA, Dolby TrueHD, or PCM uncompressed lossless audio. Lastly, the C1, like most pre/pros, only has one multichannel input, so you can only connect one multichannel analog source, unless you get one of those switchers, too. (and then, usually limited to 2-3 sources)
I could have gone with the Denon **2308ci**, the actual cheapest HDMI 1.3 receiver, but it lacked multichannel INPUTS in addition to the outputs. I still use my Parasound D3 for SACD and DVD-A over multichannel outputs, so I needed something to receive the D3 multichannels. In this sense, my Denon is functioning not just as an outboard HDMI decoder, but also a multichannel switcher for SACD and DVD-A. (no equipment I'm aware of yet, that does at least BD, SACD, and DVD-A, all over HDMI to be decoded in a pre/pro)
So how does it sound? Fantastic! Adding the new HD audio formats to the C1 is a noticeable improvement over the legacy Dolby and DTS. While I had my C1 in for service recently, I got the Denon and initially had everything hooked up via the Denon, output to my Parasound amps in the new theater in my new house. The new HD audio formats add a level of clarity and detail never before heard on DVD. So then, when I got my C1 back, why use it at all? Isn't the Denon good enough to do the whole pre/pro job? Well, it has nowhere near the fidelity of the C1. So all my non-HDMI sources I have, like CD player, tuner, etc, sound better (cleaner) when I put my C1 in my rack and connected them straight to the C1. When I added the C1, the HDMI audio through the Denon didn't sound any better than Denon-only, (you can't really ADD clarity by adding more equipment) but I think it's a testament to the C1 multichannel analog pass-throughs that they were so transparent that I couldn't notice the C1 when I added it as another connection in the path.
So, bottom line--is it worth it? For me, absolutely. The new HD audio formats make enough of a noticeable improvement that it's worth the extra cost and equipment. I think the higher in fidelity your theater is, the more improvement you'll hear from the lossless audio. Everybody's going to have to answer for themselves if the cost is worth the gains, and to what extent they go to add HD audio. And if and when I get a full HDMI pre/pro, (come on, Parasound!) it's not like I'll trash the Denon. I'll move it up to be my living room receiver, one spot up in the equipment rack, so I have HDMI capability in that house zone too.
To summarize, Advantages of using a HDMI receiver as outboard decoder for the C1:
1. HD audio capability
2. Can apply bass management, levels, and distance on HDMI audio
3. Can apply DPL IIx and other processing to the HDMI audio
4. Can also use it as a multichannel analog switcher using the multichannel inputs
5. Using a Zhd also still allows for seamless Parasound gear integration, and 5 sources
6. You can add HDMI audio without having to give up C1 fidelity
Disadvantages:
1. Not cost-effective
2. Not cost-effective
3. Not cost-effective
(Parasound, we still want a Halo HDMI pre/pro!!!)
As the title says, I've added HDMI 1.3 audio decoding to my home theater, centered around the Parasound C1 home theater controller. As you all likely know, the Zhd adds HDMI switching (up to HDMI 1.3) to the C1/C2/7100, but not HDMI audio reception and decoding. It's highly likely that Parasound will not be adding this capability, instead producing a new pre/processor with HDMI audio sometime in the future.
So in the meantime, to get HDMI audio, all of us owners have the choice to either scrap our Parasound controllers and go with other new products, or create a stopgap solution. I've done the second, and imagine I'm certainly not the only one. (there are EXTREMELY few good quality HDMI audio pre/pros out now) I looked to add an outboard HDMI audio decoder to my C1. The cheapest thing I came up with was the lowest-end HDMI receiver on the market. So I got the new Denon 2808ci HDMI receiver, really only to be used as an outboard HDMI decoder, not using the amplifier or any other sections. To still have fully automated HDMI input switching integrated with my C1, and 5 inputs, I'm also using the Zhd. Sources are a HD-A35 HD-DVD player, PS3 gaming and BD player, Parasound D3 universal disc player, and two DirecTV HD-DVR's. You can see all equipment below in the rack--Denon 2808ci is right above the C1.
Video path is HDMI audio and video out from the sources, switched by the Zhd, then HDMI out to the Denon 2808ci. From there, the HDMI video is output to my theater front projector, staying HDMI 1.3 compliant the whole way. For audio, all sources are capable of HDMI audio, and the HD-DVD and PS3 are 1.3 capable. So the audio goes source, HDMI to Zhd, HDMI out to Denon 2808ci, then decoded and sent out to multichannel analog pre-outputs to the C1 multichannel inputs, then sent as normal to my Parasound amps and speakers.
One question would be why this is advantageous, when many HDMI sources offer the capability to do decoding in the source and send via multichannel analog outputs to the pre/pro. Well, first, this keeps the signal digital as long as possible, (same reason you used digital coax/optical on your old DVD player instead of analogs) although the last bit from my Denon 2808ci to Parasound is analog. (of course, not as good as having the HDMI decoding right in the entire pre/pro) Second, the C1/C2/7100, like many other pre/pros, intentionally does not do any processing on the multichannel input source--it's just straight pass-through to keep the signal as pure as possible. Nice, but this means that bass management and such must all be relied upon inside your HDMI source, which is limited, if not non-existent. Using the Denon as a decoder, I can not only do bass management, levels, etc in the Denon, but also apply the Denon Audyssey processing for room processing. Best of all, I can apply the DPL IIx processing that I like so much, making every source a full 7.1 sound, regardless of the origin audio format, from mono all the way up to the new perfection DTS-MA, Dolby TrueHD, or PCM uncompressed lossless audio. Lastly, the C1, like most pre/pros, only has one multichannel input, so you can only connect one multichannel analog source, unless you get one of those switchers, too. (and then, usually limited to 2-3 sources)
I could have gone with the Denon **2308ci**, the actual cheapest HDMI 1.3 receiver, but it lacked multichannel INPUTS in addition to the outputs. I still use my Parasound D3 for SACD and DVD-A over multichannel outputs, so I needed something to receive the D3 multichannels. In this sense, my Denon is functioning not just as an outboard HDMI decoder, but also a multichannel switcher for SACD and DVD-A. (no equipment I'm aware of yet, that does at least BD, SACD, and DVD-A, all over HDMI to be decoded in a pre/pro)
So how does it sound? Fantastic! Adding the new HD audio formats to the C1 is a noticeable improvement over the legacy Dolby and DTS. While I had my C1 in for service recently, I got the Denon and initially had everything hooked up via the Denon, output to my Parasound amps in the new theater in my new house. The new HD audio formats add a level of clarity and detail never before heard on DVD. So then, when I got my C1 back, why use it at all? Isn't the Denon good enough to do the whole pre/pro job? Well, it has nowhere near the fidelity of the C1. So all my non-HDMI sources I have, like CD player, tuner, etc, sound better (cleaner) when I put my C1 in my rack and connected them straight to the C1. When I added the C1, the HDMI audio through the Denon didn't sound any better than Denon-only, (you can't really ADD clarity by adding more equipment) but I think it's a testament to the C1 multichannel analog pass-throughs that they were so transparent that I couldn't notice the C1 when I added it as another connection in the path.
So, bottom line--is it worth it? For me, absolutely. The new HD audio formats make enough of a noticeable improvement that it's worth the extra cost and equipment. I think the higher in fidelity your theater is, the more improvement you'll hear from the lossless audio. Everybody's going to have to answer for themselves if the cost is worth the gains, and to what extent they go to add HD audio. And if and when I get a full HDMI pre/pro, (come on, Parasound!) it's not like I'll trash the Denon. I'll move it up to be my living room receiver, one spot up in the equipment rack, so I have HDMI capability in that house zone too.
To summarize, Advantages of using a HDMI receiver as outboard decoder for the C1:
1. HD audio capability
2. Can apply bass management, levels, and distance on HDMI audio
3. Can apply DPL IIx and other processing to the HDMI audio
4. Can also use it as a multichannel analog switcher using the multichannel inputs
5. Using a Zhd also still allows for seamless Parasound gear integration, and 5 sources
6. You can add HDMI audio without having to give up C1 fidelity
Disadvantages:
1. Not cost-effective
2. Not cost-effective
3. Not cost-effective
(Parasound, we still want a Halo HDMI pre/pro!!!)
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