Is hdmi a must have for home theater?

No, I don't think so. As far as transmitting hi-rez audio information the HDMI interface still has some kinks to be worked out. Some would say that the format is irreparably flawed. I don't know if that is true. I think with future versions, eventually HDMI will become the defacto standard for the transmission of hi-rez audio and hi-def video signals. For the here and now I don't think you are missing anything.I use multi-channel analougue RCA connections and find they sound better. I personally would only use HDMI for video signals, directly to my monitor.

I don't think you're missing out, if you're able to get lossless via RCA's. Lossless is lossless. I will say that I love HDMI, as much for the convenience as anything else. Using one cable to replace as many as seven is huge for me. I've been using HDMI exclusively for two years and I've never had a glitch. Right now I have a blu-ray player, a PS3 and a cable box running into an Onkyo receiver, with the video out of the reciever to a Samsung LCD. Over the past two years, I've had as many as five differnt blu-ray players hooked up without the first glitch. So, speaking solely from personal experience, I see no reason to shy away from HDMI due to fears of compatibiity.

Hang on to your DSP-A1-if you're happy with your setup, that's all that matters. I have the same unit you do, and setup, and enjoy it immensly. Rcrerar said it right!

I would agree that HDMI is not a necessity. Mulitchannel out from a high quality Blu-Ray player can sound fantastic.

For video, HDMI does offer some very real benefits though, but no need to route that through a receiver anyway... best quality will be directly from source to video (TV or projector).

I have decided to skip out on HDMI audio since I love the sound of my Krell HTS7.1. I route all HDMI through my DVDO video processor. For BR, the HDMI video is passed through the processor (nothing but a switcher then) and sound through multichannel RCA. Sound is glorious!

Frankly I'm shocked at how non-descript this very topic has remained to the general public. I don't hear reviewers emphisizing this point either. As it's very understood that there are a couple of ways to get the HD codecs to play (either internally from a source, connected via analog, or from an HDMI connection to a pre/pro that has this decoding), it's not been made common knowledge as to what the benefits and downsides are to either method.
Can't someone simply set up an A/B scenario to compare? Then give their impressions? I see/hear non of this.
Why is that?
Once and for all, could someone PLEASE put to rest what is doing what on both (i.e, extensive assessment of sound quality differences and attributes) setup methods! Lol. Er at least point us to some pro reviews and such were this is spelled out in detail.
Thanks