HDMI setup?

[crypted]

Okay I realize that HDMI is bad-arse as far as data rates for digital signals is concerned. But I'm not understanding if it's capable of handling digital audio? If I understand it correctly, would this schema below operate correctly:

http://www.newegg.com/Product/Produc...82E16882115120

I'm thinking of buying that for my parents system as we upgrade their Home Theater as cheaply as possible.

That receiver has a 3x HDMI inputs and 1x HDMI outputs. Does that mean I could HDMI the whole system and just get rid of digial coax and optical cables entirely?

This is the schema I'm imagining:

LCD HDTV <-------------------------------
| /
| HDMI /
| /
---------- RECEIVER ---------- /
| HDMI | HDMI / ANALOG /
| | / /
BD Player DISH HD Tuner VHS Player ----> ANALOG VID to LCD

Thanks!