So I ordered the Denon 2310 and a panasonic BD60. Should I just pass the video to the Denon to let it's Anchor Bay 2010 chip process the image? I'm assuming the Denon's video processor is better than the panny's.

The ABT chip is pretty good. Ideally you'd not have to process the Blu-ray video at all, and be able to output the DVD as 480i. That would let the ABT do the de-interlacing (where it should excel). If you can't get 480i over HDMI, most implantations of that chip include a feature where it will re-interlace 480p and then do the de-interlacing properly.

Ultimately you should pick which ever way looks best on your display.

Vassillios, I would love to answer your question, but I'm still waiting to see what graphs Solid State is going to throw up next in the 'OTHER' thread!!!

All chips have their strengths and weeknesses. Your best bet is to try all options with your favorite disk. There is little to be gained with BluRay's native 1080P/24.