I still think that you've got to spend a pretty penny to get better D/A in a player than in a processor, and even when you do you still have to compromise on the surround processing (bass management, speaker distance settings, room correction). Aside from the BDP-83 (which can compare favorably to the Onkyo 885 and Model 990) and the BDP-83SE, you basically have to go north of $1,000 to get such a player. If you're looking at a processor with the feature set of the Model 998, that probably doesn't make a lot of sense.

DSD to LPCM is a different animal that D/A conversion, though. The value of retaining the audio in DSD rather than converting to LPCM is difficult to pin down. Some folks have said staying with DSD sounds better. Some folks have said LPCM sounds the same or better. Most of the discussions have been surrounding the output from a player, though, and not signal format internal to the receiver or processor - and the truth is that there are not a lot of receivers or processors available that can accept DSD at the DAC. If the Model 998 had DAC's that could accept DSD, I would be entirely in favor of a bypass mode that let DSD to straight to the DAC's. I also think that it's appropriate to support DSD input, even if it must get converted to LPCM internally. But I don't know if I would want DSD support to drive the analog design, as it is a compromise to bypass the DSP so completely (especially with Trinnov under the hood). If the best DAC for the job has DSD, then a digital path through would be smart. If the best DAC for the job needs LPCM, then so be it.