I have a Sharp Aquos 37" (I am at work and don't recall the model) and I watch blu-ray with my PS3. I have the video go through HDMI and the audio out the optical to my receiver. No issues there. Its pretty looking and with 7.1 pretty sounding as well.
I go the PS3 for blu-ray, but decided I should also make use of its console function as well. I put in a game and the screen blinks and blinks and blinks. I grab and different game and the same thing.
After looking online for a solution, I find out that there is an issue with the HDCP (copy protection since Sony loves that stuff) and the hand shake between the TV and PS3 via HDMI. You can find more info if you google PS3 blinking.
I call Sharp about a firmware upgrade and they tell me I don't need one and gave me a long list of stuff to do which didn't work.
After playing around with the settings on the PS3, I found that I can get the games to work if I turn off DD and DTS sound before I play. Then I have to turn it on when I watch a movie. So even though it is set to push audio via optional, it still talks through the HDMI. Not too terribly difficult, but annoying.
Just thought I would share if anyone has the same issue.
