Who says that the scaler in the display is better than the scaler in the receiver?
I didn't specifically say it did... however, considering nearly all displays have scalers, and that most average large screen displays have a much larger budget for premium processing then a $500 receiver would I don't think it is unreasonable to predict which would have a better processor.
It is also a question of redundant costs, which is also why I don't think you'll even find many receivers that will do any scaling, leaving it to the display, and even the playback device to handle any necessary scaling.
That said, if a receiver really did have a superior video processor than the display and the equipment generating the original source signals, then of course it would be better to use it.
Therefor, why shouldn't I choose the best possible input (presumably hdmi) from the receiver to the tv
You can still do that without scaling.
This does bring up an interesting point though, and a possible problem with video switching, and that is properly calibrating the display for each source. While some displays will let you save multiple calibration settings for each input, many do not. This means if you use a video switcher to convert all signal sources to output over one cable, and you want the display to be properly calibrated for optimum video quality, the display will have to be re calibrated every time you switch between say, the DVD player, cable/satellite, console, PC, etc.
Fortunately, many manufacturers are addressing this issue with many newer quality displays by offering multiple memory settings for each input, and not simply one or two for each input which is more common. However, some displays don't even offer that, and only allow the user to save two or three different memory settings for ALL inputs. 👎
Video switchers can also add artifacts, especially when converting signals, which is why I've found that most high-end home theater systems are either running dedicated video cables to the display from each source, or using high-end external video switchers, some of which can cost several thousands of dollars.
