Here is my answer with a little more input.
Yes, you can have a VIP rcvr with no high def programming except what the K2/4 will "give you". Its not really uncommon for people to do this. I said "depends on where the locals come from" because it does. In my area, the locals only come in on the 61.5, in high def. If his parents are the same way, there is a CHANCE that there is no line of sight for that orbital, so they wouldn't get them in high def.
That said, if someone does a 722/k4 upgrade and they don't subscribe to high def, they will still get locals in high def and not pay for high def since this is the only place the locals come in at. It's sorta hard to explain, I guess.
My guess, his parents have a high def tv and want to keep dish network. They really only watch local channels which is why they want them in high def. If they do the upgrade, they have high def locals free and have a larger DVR. Again, this isnt uncommon for people to do this, especially older folks. 9 out of 10 times, they get the locals in high def free...see the picture difference and end up getting all of the other channels in high def as well.
Jhon69, what you said is untrue about the connection. TV2 can be modulated for tv1. Pop a splitter right out of tv2, go into the modulation and set tv1 to another channel. Sometimes, depending on the software that is loaded onto the rcvr, the rcvr won't allow you to do this right out of the box. In that case, a rf modulator can be used. I guess long story short, they don't NEED a OTA modulator.