Well, if you have your 360 set to output at 1080p, it will upscale any games to 1080p even if the games themselves are only 720p. With regards to the Onkyo, I'm not 100% but I'd be very very surprised if they've neglected to put in a pass through signal from the component input to the HDMI output i.e. I wouldn't think it would be downscaled to 1080i. However, the answer if it doesn't would be to leave your Xbox hooked up directly to the TV instead of going via the Onkyo (since no sound signal is travelling along this cable anyway).