Separate DAC vs. A/V Receiver DAC

I'm just starting to "build-up" my system and could benefit from everyone's expertise. I'm rather new to all of this, so there are some "technical" aspects that just aren't clear to a newbie like me. :)

I just upgraded from a CDP to separate transport and DAC (both Theta). The signal is passed into my old (4 years) A/V receiver. The receiver has its own on-board DAC.

This is where I get confused. If I pass a digital signal from CD, LD (AC-3) or DVD through the Theta DAC and then output from the DAC to one of the Digital Inputs on the receiver, what happens to the signal? Does the receiver "process" it again? Does this defeat the purpose of a separate DAC? (I can't find reference in my manual to over-ride or by-pass the receiver's on-board DAC.)

In practice I will output the CD signal from the Theta DAC to the analog inputs on the receiver, so I can address that part of the equation. But, if I want to use the Theta DAC for my LD player or DVD player and have Dolby Digital (5.1) recognized, don't I have to utilyze the digital inputs on my receiver, thereby introducing the signal to the receivers DAC? Should I just forget about the Theta DAC for the LD and DVD and input these components directly to the Receiver?

(I know that one answer is to upgrade my receiver to separate amp/pre-amp to have greater input flexibility, but I'll need to live with my current receiver for at least another year before I can afford that upgrade.)

I'd appreciate any advise you can give. Thanks for your help.

bournnw