The HDMI ports on the 640R function only as a switch, and the unit does not recieve any data from these ports, it merely selects which input is sent on to the display screen. Therefore, the 640R does not recieve audio signals by HDMI, for audio you will need to connect seperate audio cables from your source equipment to the amplifier.
The 640R does not transcode video to HDMI, it can transcode from Composite video and SVHS to Component, but it does not transcode to HDMI. See pg17 of the user manual for details of transcoding.
As the unit functions as a switch for HDMI, it does not introduce any issues with HDCP or picture degredation. The bandwidth of the HDMI ports is sufficient to pass through signals up to and including HDMI 1.3.