The best analog master tape recorders used DBX or other kinds of noise suppression, and produced results comparable to digital recorders...no hiss. But digital is a lot easier to work with when it comes to mixdown, so the world has gone digital. If you heard hiss on a CD it must have been a very early (or poor quality) master tape.
By the way, another common source of hiss is vacuum tubes. (Sorry about that).
As to LP's sounding better...I agree that they will sound different, and you may think, better. Mastering of the LP is different from the CD, and the RIAA equalization process, applied to the signal when the record is cut, and to your copy when you play it back is extreem and would be almost impossible to accomplish perfectly. Spectral balance will change. Also, in cutting LPs, it is common for LF signals (subwoofer fodder) to be mixed to monaural, because phono pickups don't do well with very low frequency vertical groove modulation. Of course this will affect the sound, and you may prefer it.