I don't promise to be right, but my recommendation is:
Use digital for audio wherever possible, definitely for the Sky+. If your DVD player doesn't have iLink out then you'll have to use analogue for SACD/DVDA if the player supports those formats. But maybe you don't care about SACD/DVDA, in which case the AX10's upsampling conversion for CD's is very good. Use the JS RGB to component converter for Sky+. You'll probably route the Sky RGB via the DVD recorder to the JS converter, to get the best quality when transferring from Sky+ to DVDR. Don't waste money on expensive cables (I am not a cable voodoo believer); just keep them short. The ribbon style Scart cables (available from CPC) are much easier to route than the sausage type.
You can hook up the analogue as well as the digital audio, and see which you prefer. Remember that if the AX10 is to do it's stuff like room and speaker equalisation for analogue inputs, it's going to re-digitise the analogue anyway. So just use digital audio for a simple life. I dumped my iLink capable DVD player because I just wasn't getting enough extra pleasure from SACD/DVDA to justify it, and changed to the Momitsu which does native resolution on my plasma.
But I have to say that if I was buying an AV amp at this price level now, I'd be thinking about the need for HDMI rather than component within the next couple of years.