If you are looking to get into BR/HD for video improvement only, then an external switch should be all you need to send the HDMI output of the devises to your display.
If you wish to get into HD audio, then that's a whole different ball game. You will need a receiver that not only switches HDMI, but processed it, and does that correctly.
Waiting for 1.3 is an exercise in futility. When 1.3 receivers start hitting the streets, they will be plagued with bugs just as the 1.1 and 1.2 receivers are. Just get one that YOU KNOW works well. The Denon 2807 comes to mind and being one of the very few that does. The new line of Marantz do as well as the RX Yamaha's.
I wouldn't get too excited over that LG dual format player if I was you. It's overpriced and does not support all the new audio codecs.
The HD X2 is quite a machine as well as the PS3. You can pick up both for less than the LG and you will have undoubtably the best up converting DVD player sold as well. The X2 was in a recent shoot out with some stand alone video processors and beat them all in a battery of picture quality tests. This included the Crystalio CII that sells for just under six grand. The PS3, although a game machine supports the BR codecs and will play SACD and DVD-A. With this machine and X2, you'd have ALL audio formats covered for just about $1100.
