To get sub/satellite, you'll need the unit's bass management in the loop. That means an analog stereo source would be converted to digital so that the bass management could be applied, then converted back to analog so it can be fed to the internal amps or the pre-amp outputs. There would be no surround processing of the source (which I think is what you mean when you refer to downmixing) if "stereo" was the active processing mode, but there would be an A/D/A process and of course the bass management would divide the signals around the crossover point so that the satellites received everything above the crossover and the sub received everything below the crossover. Using the left and right channels of the 5.1 input would keep the signal in the analog domain all the way through, but would also bypass the bass management and therefore leave the sub silent. All of this falls by the wayside if we're talking about a digital audio input - in that case, selecting "stereo" would yield a stereo output with bass management applied if the mains are set to small.