The Onkyo 805 does support 1080p. If you input HDMI to the 805, and output HDMI from the 805, it will pass what it's given- presumably 1080.
What the Panny rep was probably thinking was that if you use HDMI out from the 805, but use, for example, component in to the 805, it will downscale it to 720p. With HDMI out, any non HDMI input to the 805 will result in 720p out.
Yes, the 875 will keep things at 1080, or presumably even up 720 to 1080 (I think). That's what you get for the much higher price- a better video processing chip.
Those of us that plan to only feed HDMI into the 805, and HDMI out to the HDTV, have no need for that feature, or concerns about it. My AV receiver is there to act as an HDMI switch, and provide great audio- and offer the option of taking non-HDMI inputs and sending them to the HDTV over the single HDMI input that it has. For example, since I play DVD-audio discs, and the PS3 won't play them, I have a JVC 7 disc DVD player hooked up via analog and component. True, not much video out of those DVD-audio discs, but since I was hooking things up anyway......
Plus, my current HDTV is 720p anyway, so if, god forbid, I ever reconnect a VCR to the system and feed S-video to it, the 720 out will be an improvement.
The Onkyo 805 also has component monitor out.