I am working on a project and am wondering if an RPI is capable of a DLNA connection, and if so, could it be used to decode ethernet signals, and them turn them into HDMI output, or possibly push the image through the RPI and have the DTV decode the code. Is this possible at all, and if it is, what images are recommended for this, and what programming is required?
Your question is not clear about which role of DLNA you are trying to use the Pi for. Do you want your TV to stream data that is stored on the Pi (Server), or the Pi to stream data stored on another DLNA box(Client) I have provided solutions for both. The first part of this answer assumes you are running raspbian.
The Raspberry Pi can be setup as a DLNA server for use if your TV supports it and has a network connection. Refer to the Debian Package information for more information.
If you are looking to make the Raspberry Pi your DLNA Client, you can use VLC with the proper options. This will use the DLNA Server on another system, and the Pi will play the media. To get this on your TV, you will just need to run an HDMI cable to the TV from the Pi, and then control everything with a keyboard and mouse, or you can look into a Debian compatible remote control.
As far as a 'out of the box' solution look into Raspbmc I don't think that it will work as a DLNA server, but it will work as a client.
Your thought about using the DTV box, I think you are making a mountain out of a molehill. The Pi should be able to do everything you need it to without trying to integrate it into a box that is designed to do only one thing.