I can't speak from experience, as the onboard decoder in my player does not support DTS (and isn't nearly as good as the 1050's decoder for DD, so it's not even hooked up), but my understanding of the second item in your post is that if you use the decoder in your DVD player you can use the Surround 6.1 mode to extract a matrixed center surround channel from the surround channels. As far as the 1050 would be concerned once it's using the 5.1 Direct inputs, the track is no longer either DTS or DD -- it's merely a 5.1 channel analog sound track. You might want to e-mail Outlaw and get their take on it, but that's the way I read it.

(Now, back to receiving an 88MB attachment via e-mail -- I can't wait to find out who the sender of this one is...)