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Plugging an UPS into a surge protector is fine. What you shouldn't do is plug a surge protector into an UPS. I've never seen a great explanation as to why, but what I have read is that the dirty output of the UPS operating on battery will look like many small surges to the surge protector. This in turn will cause the surge protector to shunt power to the ground wire, quickly draining the UPS's battery and destroying the surge protector (most surge protectors are the MOV type, which are degraded every time they activate).
As for stepped sine output being a problem for HT electronics, I have a feeling that's not as big of a deal as some people make it out to be. In most UPS's (read any one you're ever likely to see) power is normally sent straight through from the wall unchanged. It's only when the switch to battery (brownout/blackout/overvoltage situations) that they produce their own power, and that's when you'll get the stepped sine wave approximation. I don't know about you, but when the power just went out I'm not very concerned about my soundstage collapsing, I'm more concerned with getting a flashlight out.
UPS manufacturers might caution against using them for an HT simply because HT's are so power hungry they will very quickly drain the battery. Same reason they say not to plug a laser printer into an UPS.
On the other hand, I don't particularly care about powering my HT for another 10 minutes when the power goes out either, so I don't see much point to an UPS on the HT. A good surge protector seems like a better deal anyways.
BTW, there are UPS's which are always on battery power (and use the wall just to keep the battery continuously charged), but those tend to be very expensive, and probably produce good sine wave output as well.
-- Dave
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