I bought a Panasonic E55S last week and am not sure if I have it hooked up correctly as I've noticed a degradation in picture quality on my satellite receiver.
I hooked the E55 to my HDTV with component and L/R audio.
Into the E55 I hooked my Dish 508 with S-Vid & L/R audio to one input L-1.
Into the E55 I also hooked my Dish 811 with S-Vid & L/R audio To L-3.
I also have my 508 hooked to the tv with composite video (yellow)& L/R audio and my 811 to the tv with DVI & L/R audio.
Both the 508 and the 811 also have optical to my audio receiver.
When I view the 508 from the tv's composite input it looks pretty good although not as good as it was before I hooked the E55 up but if I view the 508 from the E55 connection it looks terrible. I've also recorded some programs that I had stored on the 508's harddrive to the E55 and they don't look that great even though I used the XP speed.
I also notice if I switch on the E55's progressive scan, it looks even worse.
I tried an E-55 when my E-20 died and it made my 4DTV satellite look considerably worse just running the signal through it, so you may not be doing anything wrong.