Why a high end AV receiver encrypts upscaled analog input is a complete mystery to me. Looking around I found that an even more sophisticated device, the DVDO iScan VP30 seems to be capable of upscaling all analog input up to 1080i via HDMI without HDCP encryption.
Update
Apparently, the DVDO VP30 will upscale and convert all incoming unencrypted signals to unencrypted HDMI output. Exactly what I was looking for.
DVDO iScan VP30 seems to be capable of 
