With the analog connection, the first thing the receiver is going to do is re-convert the signal back to digital, to do its DSP magic (bass management, ProLogic, etc.) Then the signal will be converted back to analog before being sent to the speakers. This extra A-D-A step will hurt signal quality, although probably by not too much if it's done well. And you're still using your receiver's DACs.
With a digital connection from the IR1000 to the receiver, you basically eliminate that extra A-D-A step.
_________________________
Matthew J. Hill
matt@idsi.net