Hmmm... Interesting...
Did you select the DTS track on the DVD? The 1050 identifies which format the DVD player is providing, but the DVD will default to DD (since most people can't handle DTS). You'll have to select DTS from the DVD menu to get the DTS track.
As for the real question here -- the random gaps in the audio, which appears to be caused by the 1050 changing decoding mode from DD and back to DD real quickly. Do any other discs cause the problem? (And has anybody else around here watched JPIII through their 1050, or through an RP-56 to any receiver?) I'd be curious to know if the problem repeats for other DD sources, and if it occurs with DTS sources (see my first note to test that). If it's the DD only, I'd suspect the 1050's decoding. If it's DD and DTS, I'd start to wonder about the RP-56 a little as a possible culprit (although since PCM worked over the optical, the RP-56 is probably not at fault).
Have to think about this one some more...