All settop boxes (satellite and cable) will only output at the resolution you chose. AVR's with upconvert chips in the HDMI channel do the same thing as does your tv set. Depending on your set (720p, 1080i, 1080p) what resolution you chose is what your set will show. If you chose 720p then all 1080i, 1080p pictures will be downrezed to 720p and and SD will be upconverted to 720p. I am not sure if there is anything other then a DVD or BluRay player that can be set to not convert.
That is why SD can look so bad on a large HDTV screen. While it would be nice to see the actual true resolution of the video you are watching without changing certain settings, I am just not sure how that can be done - especially with current settop boxes.