Advice please: connecting BD player, AV receiver and HD TV

Just took delivery of my first universal disc player (Oppo BDP-95) and the connection options are bewildering. (My AV receiver is a Marantz SR7005 and the TV is a Samsung full HD). The Oppo has two HDMI-out sockets, a digital out, a stereo-out and a 7.1 analogue out. The Oppo's manual suggests that running two HDMI cables - one to the receiver for audio and one to the TV for video - produces the best results with HD content. I would greatly appreciate any advice on the following:

1) If I run two HDMI cables, am I correct in assuming that the digital to analogue conversion takes place in the Marantz? (I think the DACs in the Oppo are better than those in the Marantz).
2) Since I will be using the Oppo for CDs, SACDs and DVD/Blu-ray, what happens when I connect the stereo and 7.1 outs as well as the two HDMIs?

Many thanks.