There always seem to be some debate about optical vs. coax but from my experience I don't feel there is really a noticable difference. Optical cables are abit more fragile in that you have to make sure you don't have any kinks or "hard turns" in your cable run. I run my CD, SAT receiver and DVD with optical but a second CD player and a Squeezebox 3 I use digital coax.

Regarding switching I think you are referring to the 990's video switching. As I run all source video directly into my montitor I'll let someone else address the switching as I have no expereince with it.