Is it possible to install in Kubuntu 8.04? I'm having all kinds of trouble updating the kernel and getting all of my devices recognized again, so I'd like to try 8.04 with MCE on top of that. I know it uses KDE 3.5 which I'm guessing that's where the dependencies exist between MCE and the Kubuntu. Is this true?
In short No. You need 0710 until at least the first beta of 0810 (more likely weeks rather than months). Zaerc did do some builds on 0804, but they were experimental, not for the faint-hearted, and not supported in anyway....
If you're really desperate see: http://wiki.linuxmce.org/index.php/Hardy-iglu it mostly works now and has been updated to just about beta quality, but all attention is currently focussed on the upcoming 0810 version (which will have more new features and bugs fixed). So like ColinJones said there is no support for it and you'll pretty much be on your own.
I guess my concern is that if go with 7.10 and use spdif for now and start to build my media library, will 8.10 just be an upgrade, so my library will stay in place.
What's wrong with spdif?! Anyway, whether on not it is an upgrade, your library doesn't matter, they are only files, just copy them across in the worst case!
Just wanted to be able to have one hdmi cable coming out of my av receiver going to my tv. This way I can watch tv/movies in 7.1 or through the tv speakers. Also, less wire snaking through the walls.
Yes but there's no disadvantage in terms of sound, and once the cabling is done, its done! Anyway, I would suggest that once you have the amp set up, you should be retiring the TV speakers permanently... really there's no reason at all to use them! You certainly don't need a digital connection for TV speakers :)