I'm using the ARC input into my 975 from my TV instead of using the 975 to switch sources.

My TV allows the selection of Dolby Digital corresponding to ARC 3.2.1 on the 975.

Would I be getting better quality by having the 975 do the decode?

Situation 1:
DirecTV (HDMI) --> TV --> HDMI (ARC) 975

vs. Situation 2:
DirecTV (HDMI) --> 975 --> TV