I have the same exact setup HTPC-Yam863, so here are some valuable inputs..
1) You will not find PrologicII/Dolby True HD and other high end formats in the rips that you downlaod from the internet, or maybe DVD's that you play..unless you plan to get a blue ray player, or maybe download a proper BD of the internet(around 16gb), so the decoders for this format do not get utilized.
2) Unless you have a seperate GPU which has the ability to bitstream the high end audio formats over HDMI, the HDMI audio processing feature is just for future securing.
3) The video HDMI signal from looses considerable amount of blacks (search for the 0-15 black problem for Yam863 over internet), so I am not using HDMI outputs from Yam863 currently in my HTPC setup.
4) The upscaling not really great (input signal on TV from cable TV (composite) llok better if i connect those directly to TV rather than from Yam863)
As rightly suggested above, you can rate Yam863 to be a good musical AVR, sits somewhere between 5003/5004 and 6003/6004 or Denon 2310. As your choice is 50/50 movies music, this is the best buy in the price category (40-45k),If you are going to shell out around 50-55k denon 2310/marantz 6004 should be better.