Thanks for the responses and the confirmation of my hypothesis.
As far as two-channel performance with my 970, I have been very happy with it configured as follows: Analog bypass mode, using the analog HPF/LPF 80Hz crossover setting for my sub.
I also like the analog bypass, but I found the analog crossover of 80Hz to be too high for my speaker/sub combo. Probably because my sub is not that musical and my mains have a pretty good bass response. So I just send everything to the mains and do without the sub.
rom what I've heard, the Squeezebox uses a very good DAC (Burr-Brown, if memory serves)
Yes, that's correct. I have read many of your posts when I go poking around for information and your knowledge is amazing.