In a way, yes. If the Onkyo system had optical in, you can use the TV optical out. If not, you can get an adapter for optical to the RCA/3.5 mm audio. You may not get surround sound but would be able to get at least stereo.
ARC requires both the TV and audio system to support it.
The Onkyo does have an optical audio input. You will use that to connect the TV to the HTS. No loss of quality just requires an additional toslink cable. You may need to turn the optical output on, the TV speakers off, and change the output to bitstream in the TV menu to get it working. You may also have to assign the optical connection to an input name in the input set up menu of the Onkyo.