If I hook up all my video through the reciever via hdmi, does the reciever need to be on to watch? Why not just hook up dvd player only useing digital optical? Im looking at the Onkyo TXSR804
yes the receiver needs to be on for a picture to display on the tv from a device connected to the receiver.
you could connect you're hdmi devices to the tv directly then use a optical or coax connection to get the audio to the receiver. that would work just fine.