the best way is to keep it withe the scart and change the video output to RGB that way you will get a better picture. the 875 upscales to 1080p from all sources but you would have to use a lesser connection so not realy getting any thing better. by all means send the audio from the sky+ box via optical but IMO just leave the onkyo out of it it may do more harm then good.
Agree with our man sheepboy here. Wasn't Sky+, but I tried re-routing Freeview from my Topfield box to my Onkyo 905 via an S-Video connection. After the Onkyo had upscaled it, it looked just slightly worse than a direct connection from my Topfield to the TV via a direct RGB Scart connection (remember - with this connection the TV is upscaling it to the TV's native resolution). Unfortunately, upscaling can't work miracles and with a bad connection like S-Video (which is the best you can get from the Sky+ box to the Onkyo), you're not likely to see any improvements I'm afraid.