Not to hijack it, but I, too, am interested in other Goojers' wireless rear channel experiences. In my living room, I only have these three option available for setting up the rear speakers:

1. run the wires under the couch in a plastic conduit. not sexy.
2. redo the hardwood floor, channel the wires underneeth, install outlet ports -- not happening anytime soon, since the floor is very good and there are no other incentives to replace it.
3. install in-ceiling speakers -- I have no idea what the sound would turn out like; but I suspect the locational perception will be messed up.
4. put the wireless setup in place.

option #4 seems to be the most viable .

Exact same thing happened to my cable box/DVR from Cablevision during the period when I used its HDMI output (switched back to Component eventually because of annoyng intermittent content protection warnings on TV). The port continued to work, however, so it didn't bother me much.

It depends on the receiver you choose. If you choose an HDMI-passthrough receiver, then yes, you will need to have the sound hooked up in some way to both the TV and the receiver. HDMI-passthrough basically means that the receiver functions as a video switch and does not process the audio from the HDMI. It passes the signal through. Now, you would be able to avoid having to hook both consoles up to the receiver if your TV has an audio output of some kind. Just hook the audio output of the television to the receiver and you're golden.

Now, if you choose a receiver that will process the HDMI audio, then you just have to hook the consoles up via HDMI to the receiver, then plug the receiver HDMI-out cable into the TV and you're done. That's the way my setup works.

I'm using 2 of the 3 Component inputs on mine, and all 3 HDMI ports. Hell, with the addition of my PS3, I'm using an HDMI switch on one of the HDMI ports. So basically, if you're afraid that using one of your HDMI ports cancels out the use of one of your Component connections, the answer is no. It's all configured inside the menu system of the receiver, anyway. Each one of the input jacks is numbered, and you just go into the menu and specify for the "Game/TV" input, Component 1, 2 or 3, or HDMI 1, 2 or 3. It's all very flexible.

I don't have any experience with upconverting anything more than the Wii's component signals, however (the other component input I'm using is for my Zune dock). That ends up just being 480p. The worst that I would think could happen, however is if your display is progressive scan, you'll notice the interlaced lines from the 1080i signal. Which you should've been seeing at this point, anyway. When you say "old xbox," do you mean an original XBox, or are you just waxing sentimental about your 360? If it's a 360, I don't see how there could be any problems. The 360 will do 1080p through the receiver just fine. I have a 720p projector and I'm running the 360 on 1080p with no problems. Of course, that's straight HDMI...

...And dangerous. They offer a free, no-obligation 30-day in-home trial (that's a lot of hyphens...). Their speakers are not cheap, and if those 30 days get you addicted to their sound, you could be in serious danger of overshooting your budget by at least threefold

When you get them, they're in velvet pouches.

Audio Authority makes some nice switching hardware for both HDMI and Component video and audio. IMHO one of these switches + a sep. multichannel amp would be much more convenient than a whole receiver. Unfortunately, multichannel amplifiers cost a stupid amount of money.

I use one of their component switches to run all of my component video things into one input on the TV, and then I have 2 HDMI things also going into the TV.

I have not bothered with surround sound yet, because it's too much work to set it up.

http://www.audioauthority.com/product_list/Switcher

The great thing about the AA component switch is that it is completely automatic. You turn on a source and it switches to it.

My problem with receivers is that they cost a lot of money and they don't have enough inputs. Except for the ones that cost even more money.

Someday I will own a set from Paradigm. Someday.

Oh, and on the receiver I've been waffling back and forth between the Onkyo SR605 and the 705 for a couple of months now and haven't been able to come to a decision. There's nothing else out there for the price though that has the same feature set. They both even support all the new HD audio formats on HD-DVD's and Blu-Ray discs, which is still pretty rare to see support for actually.

If you've never heard a set then you can't really judge.

They'll blow away Klipsch's that cost twice as much.

My media room system is just used for video games and movies, so it's a pretty inexpensive collection of gear that does a good job. I've recently relocated the rear speakers to the.. rear (they were on the side), which has helped with the positional audio quite a bit. Here's my rig:

Receiver: Kenwood VR-606 100 watt 5.1 channel Pro Logic II, toslink optical $130
Fronts: JBL L1 speakers - got these speakers over a decade ago and they still sound awesome. Impressive bass, and all around great speakers. I got them for half price because one of them had a wood chip out of the side, wheee! $300
Center: HKC, Harman Kardon center channel. $150
Surrounds: HKB-4, two-way surround speakers $150/pair

rabbit, what kind of inputs/outputs does your TV have?

I answered a similar question over on Ask.Metafilter a year ago, and the overall advice remains good, so I'll refer you there:

How to build a home stereo.

I tend to think of $1500 as being the perfect price/performance spot, giving you enough for a good-sized sub, a decent receiver, and solid speakers. Every piece can be highly competent; you end up with nothing that sucks, and really solid overall sound. But $1K is still quite good. You can do very well, if you shop carefully.

Remember everyone learns to hear differently, and that all speakers make tradeoffs. What you're looking for is speakers that make tradeoffs that sound good to your ears. If you're willing to take some time and do some shopping, you'll be able to find something you really like. It's just a matter of figuring out what you really like, and the only way to do that is by critical listening.

If you've spent a substantial amount of time with really good headphones on a high-quality DAC, that will shorten your speaker-buying process a lot.

I remain very pleased with a set of relatively cheap Energy Take2s I bought almost fifteen years ago. I think i spent about $500 on the 5.1 set, which I think would be close to $1K now. The sub is very weak and I don't like it, but I chose the cheapest of three options, so it's my own damn fault. The speakers themselves are dynamite little guys. The line has been updated a number of times, and I imagine they're even better now. Energy is hard to find in the US (it's Canadian), but if you can find a local dealer, do take a listen.

I hear good things about Paradigm Atoms, and Klipsch is certainly worth checking out. My particular ears have always really enjoyed the Boston Acoustics sound as well.

Onkyo makes excellent receivers that are very reasonably priced. And, as I say in the linked article, their HTIBs are also really, really good. They're, well, real stereo systems. They tend to be strangely-styled, but they sound awesome. I've listened to several in the stores and was impressed by the sound-per-dollar every time.

It looks like the Take series has gone through a number of metamorphoses over the years. As far as I can tell, they're up to the Take 5 now, and have diversified it into tall towers as well as the original small satellite-style speakers.

I also see, though, that they just introduced the Take Classic, late last year. There's an Audioholics review here. That's a LOT like my Take2 setup, which isn't in the front room anymore, but is still serving me faithfully as computer speakers. The price is even similar to what it was when I bought mine... $600 for a full set, including sub. Add a decent receiver, like an Onkyo 504, and I think you'll probably be pretty happy with it.

If you want a stronger sub than that, you'd have to go with separates. Hsu Research and SV Sound are two of the best subwoofer makers online. Both make excellent, excellent products.

You can buy subs online without worrying about hearing them; a sub is a simple device, and we don't hear deep bass very well anyway. You'll be happy with anything you get from either company.

To give you an idea of the difference between subs... the tiny cheap ones will maybe buzz your blinds a bit. A solid one, like Hsu's $300 32hz type, will thump the floor enough to feel in your feet, and will visibly shake the blinds. This is what most people think of when they refer to a subwoofer. Hsu's $500 jobs will buffet you, thumping you in the gut and making your walls vibrate enough to rattle pictures askew. (this is enough bass to make most people go, "holy crap!")

The $1k jobs will shake your entire house; it feels like the walls are bending. You can't even imagine what bass like that sounds like until you've gone through it at least once. This isn't the thumpy, unpleasant, bullsh*t bass you get from some of those low-rider cars. It's very different. It's like normal movie sound, except it will physically pick you up out of your chair, shake you, and drop you. Those big subs reach out and completely pressurize your entire airspace; they take total control of your house. This isn't "holy crap" bass, it's guests-looking-at-you-slightly-stunned bass.

But... that's also as much as you wanted to spend on your whole system, so store that for later reference.

I did that with a pair of good speakers for long time, but a few years ago the DVD audio tracks going through my receiver started sounding kind of messed up when I had the receiver set on 'stereo.' Like the background sounds or music would be too loud or too quiet, conversation not at the right level, etc.

Is that likely just the receiver I had?

I just upgraded my 7-year-old RCA with an Onkyo 605. The 605 is the cheapest receiver currently available that will upmix component/svideo to HDMI, has 7.1 surround with support for Dolby "TrueHD" and other quote-unquote high-def audio formats, and support for 2 Zone audio. It's got plenty of SVIDEO, component, optical, digital coax, and good ol' RCA connections, support for XM and Sirius, and a nifty self-calibration routine for your speakers. There are some issues with selecting alternate audio inputs when using HDMI (these may or may not pertain, but if you think they might, I'd suggest checking out the reviews on the 605's amazon.com product page) but for the unparalleled feature set at a $400 price (they can be had for around $380 new-in-box with a little searching) I don't see anything beating the 605.

Granted you're not getting the wattage or ginger bread featues of some higher-end receivers, but it doesn't sound like your needs are that extraordinary. The only practical limitation on sound quality is your speakers. Although I wouldn't advise you buy one there, many Bose stores retail Onkyo receivers.

As far as speakers go, I'll defer. I'm still running my old RCA 5.1 speakers--which sound better than ever, btw. A couple of general suggestions: don't get too caught up in impedance/wattage matching. If you're at or lower than the stated wattage, you're good, and for impedance, don't go lower than 6 ohms. Also, You will also have no difficulty running 5.1 speakers on a 7.1 receiver--unless you're living in a concert hall, I'd encourage you to. There aren't enough 7.1 encoded sources out there to warrant the extra scratch in my opinion, and besides, in a typical living room, five speakers generate an adequate 3 dimensional sound field. Unless you're living in an auditorium it's probably not worth the expense, and having a 7.1 capable system means that you could always add the rear surround channels at a later date if you so chose.