Updated 05/25/2011: Save yourself time, money, and frustration by checking out my latest solution.
The new hardware arrived. Yesterday afternoon I ran two CAT5E cables under the house from the living room to the bedroom, which replaces the coax that I was using to send audio and video from our DirecTV HR20. Initially, I couldn’t make a connection so I cut the RJ45 connections and rewired new ones.
I still had problems. After a while of troubleshooting I realized the bedroom TV was getting an intermittent signal from the DVR. I figured that the run might have been too long for CAT5E so I cut a couple meters of slack out. After making that change the signal was constant – no interruptions so far. The HDMI switch still shows a blinking LED on that port, which may be an indication that the DRM info isn’t coming back from the TV, but as far as I can tell it is working (and so is the living room TV).