What I was trying to say was to set the device to output as high as possible (i.e. 1080i) and then let the TV do the final down conversion to it's native format.
This is the incorrect advice for an SA STB (and for the Motorola as well). As I stated in my previous 2 posts), you should enable the appropriate formats in the STB and enable passthrough.
This is not possible with the Motorola STBs and that may be why you are confused by my statements (although, the Motorola STBs should typically be set to 480i for the 4:3 override, but you only have one option for HD (1080i or 720P). The SA can passthrough all 3 formats.
So, when the SA STB has an incoming signal of 480i, it can be set to passthrough 480i, also if an incoming signal is 720P it can passthrough 720P and if the incoming signal is 1080i, then it can passthrough the 1080i signal. This almost always provides the best PQ because the TV does a better job at converting than the STB does. (unless the TV has very poor conversion). This also eliminates "double conversions"
Now back to the OP's original questions, it is possible
, that after settting up the STB as I have indicated, that the AVR can do a good job of converting the signals to say 1080i and feeding them to the TV, but it's unlikely that that is a better option than letting the signals pass unaffected to the TV, but again, feel free to experiment.
So, should the STB, or the AVR, or the TV do the conversion? My recommendation is that it's likely that it's best to have the TV do it for the STB.
As discussed above, the answer is different for an upconverting DVD player.