I looked at the manual, because I read vp8000's post the same way but felt that such a limitation would be a huge flaw in the PS3 - so much so that it would have already produced a major uproar online. In fact, there's no indication in the manual that the optical output is disabled under any conditions. Vp8000 seems to be talking about the fact that you have to pick between HDMI, component, or composite/s-video for the video output. Your plan should work fine.

By the way, the 990's DVI input is purely a video switching connection - DVI doesn't carry audio. You could use the 990's switching if you wanted to have a second DVI or HDMI source, but both sources would still need a separate audio connection to the 990.