Originally posted by gonk:
The PS3 cannot bitstream the new formats - the HDMI implementation they used was the very first one built, and indications are that the hardware simply can't do it.
I think the question of whether to decode in player or receiver/processor is a tough one - some folks really want to do it in the receiver or processor, but if you decode properly in the player you are delivering multichannel PCM to the receiver - which is the same thing that would happen if it decoded internally. Because of that, I'm not convinced it matters (assuming the decoding is done properly). One benefit of decoding in the player is that it allows some bonus features (specifically secondary audio) to work.
As always, thanks for the info Gonk.