Look into MARANZ....
Hah! That's possibly the worst advice ever. It's like someone saying they want a new car but only have $12,000 to spend and sending them to the BMW lot

Great equipment, though (from what I've read).
I'm not personally familiar with any of those receivers in the HTR line. I just did a quick search for an inexpensive Yamaha receiver cos they make really great stuff for the price. Just make sure that, even if it doesn't do upconverting to component, that it at least
has component inputs.
As for them not using the 6.1 or 7.1 that's good if they're using the A B switch thingy to have speakers in a different room. With most inexpensive receivers (probably all of these, from 5850 down) you have a choice of having 5.1 in one room and stereo in another,
or 6.1/7.1 in a single room. Generally you can't do both without spending quite a bit more money.
Incidentally, I'm getting a
Pioneer VSX-1015TX for Christmas. I'm excited.