I switch all my video and audio (DVD, PS2, Digital TV) through my HK amp with no noticable signal loss on an 8' screen. However, I'm only switching Svideo signals, not component (the best). Downgrading the signal to composite (the worst) will probably make things look a bit shoddy on a pin-sharp plasma display. You will probably notice ghosting of the picture. Can you not use S-Video?
Edit: If you meant component not composite by "comp" then sorry, disregard my rant about composite - you'll be fine!
If he means component (aka YUV) with "comp" than he could use that, but I doubt there will be much of an improvement as RGB and YUV are usually considered equal quality-wise.
Might depend on the equipment though, need to try to be sure.
airdrawn, i run both my dvd and xbox via component through my rotel amp to my projector and i havent noticed any degridation in quality. Demo a few scenes with each, one connected to the amp and one not and see what you think, i would be surprised if there was any reduction in quality. it would also be worth finding out what the component bandwith is on the nad.