Multi-Channel Input and my AVR

Yes, using the analog multi-channel inputs bypasses the receivers bass management capabilities.

HDMI won't help you in this case, since the Pioneer receiver does not pass audio via it's HDMI connection.  The analog inputs are the only way for you to get the lossless Blu-Ray audio.

Jason

To my knowledge, few if any Blu-Ray players offer crossover settings for the LFE channel.  The audio setup for the analog outputs is usually limited to which speakers you have, are they large or small, delay, and level adjustments.

Few receivers offer any bass management to their analog inputs, so yes, you're pretty much stuck.  I'm in the same situation myself - I have the Panasonic BD-55 and am using the analog connections.  I agree that overall, the improvement in sound quality compared to DVD is tremendous - much more than I was expecting.  Although it could likely be improved a bit with increased tweaking ability (like setting the crossover), I figure compared to the DVD the added improvement would be incremental, anyway.

That's my rationalization for now.

Jason

You should set the speakers up pretty much the same way you would through your reciever.  Definitely turn the sub on.  If your mains are full-range speakers, set them to "large" otherwise set them to "small".  It's almost always the case that the surrounds be set to "small" since they're typically smaller bookshelf-sized to begin with.

As for the audio levels, the Blu-Ray setup should be able to provide a test tone that cycles through each speaker.  If you have an SPL meter, then you can adjust the levels of each individual speaker pretty accurately to a reference level.  If you don't have an SPL meter, you can at least try to ballpark the levels by ear - make sure you're sitting in the prime listening spot.  Doing it by ear is by no means accurate, but it should get you pretty close.

I would think that if your receiver's crossover was set to 80Hz before, you can expect to get pretty similar results by setting the crossover on the sub to 80Hz, but I can't be sure of this.  Perhaps someone else can chime in on that.

Master and Commander does have a very dynamic soundtrack, and the surround usage is very aggressive.  After running through the setup, you should probably try a couple other movies as well to see how it compares.

Jason 
 

When properly calibrated, and when listening to a test tone (white noise), the volume at the listening point should sound the same from all speakers.  It's up to the individual sound design of each DVD or Blu-Ray that you listen to that determines how much sound goes to each speaker.  Some sound designers are much more agressive than others when it comes to deciding how to split up the sound - that's why it's important to calibrate using a test tone.  It removes any ambiguity and ensures that the relative emphasis of any one speaker to another is as close to what was intended by the original sound designer.