"Uncompressed PCM at 24/96 sounds terrific through an analog connection in my system" (john Z)
YEP! Indeed, I have been running PCM 24/96 and redbook from a superb CD player direct to an analog input on 2 channel pre's for years, WITH EXCEPTIONAL RESULTS TOO! Infact, until the advent of the DSP room correction, that was the ONLY WAY I'd run my 2 channel setups! And, I agree, it sounded terrific (considering a solid setup in an an acoustically sound room) HOWEVER, processing DD/DTS with this connection setup (processing in the DVD player) was another story entirely!!
Perhaps its likely do to the quality of the DD/DTS decoders and how it's processed and amplified from the analog out's of the DVD players. However, nontheless, it just never worked well in this regard. That's all my experience has said here. Also, if you read many of the back articles over the past years, you'll hear reviewers commenting on these options and saying they recommend digital connection processing in an outboard pre/pro for dd/dts dubties (heck, if you didn't need to do it this way, all us av-phile guys could do without pre/pro's completely!!!)
"As an aside, if an analog connection is so limited dynamically, explain why the two most dynamic music formats, SACD and DVD-A, are only available via analog connections?" (John Z)
Again, see above. I agree, PCM cd's work well from the analog outs of players - just not well for the movie processing.