Check out my HDMI FAQ - it has some information on the new audio formats offered by HD-DVD and Blu-ray. Multichannel PCM vs. DD/DTS is in some ways similar to CD vs. MP3, but it's not an exact comparison.

Multichannel PCM on Blu-ray discs was done initially because the early players didn't include decoders for the new audio formats. It is a significant disc space hog to use, and newer releases are using multichannel PCM less and less. Where nearly all releases used PCM at first, I'd guess that now fewer than 25% use it. There are even some Blu-ray releases that are only using Dolby Digital or DTS. Over the next year, I'd expect studios to move entirely to Dolby Digital Plus (which is just an advanced form of Dolby Digital, also using lossy compression), DTS-HD, or the two lossless compression options TrueHD and DTS-HD Master Audio. The latter two can offer the benefits of PCM (no lossy compression) in much less disc space.

For now, the options for connecting a Blu-ray or HD-DVD player are much as you describe: HDMI v1.1 or higher (not available on the 990), multichannel analog (which relies on the player's DAC's, although the 990 can still provide you bass management), or coaxial/optical. The latter option which works fine for those Dolby Digital discs and for DTS-HD discs (even wtih the other two connections, no decoders yet exist in player or processor to decode DTS-HD, so we have to rely on the legacy DTS track embedded in DTS-HD no matter what we do) but will end up giving you audio encoded on-the-fly as high-bitrate DTS or Dolby Digital (Toshiba's HD-DVD players use DTS, but I think Sony and some other Blu-ray players use Dolby Digital).