The PS3 will decode every codec with the exception of DTS-M. It is rumored that there will be a firmware update coming before Christmas to address this, and I have no reason to not believe it. Sony has been very forthcoming with firmware updates for the PS3. Sony has been pushing updates to this machine at a very impressive rate. If you do have a DTS-M only Blu Ray disk, you will not get lossless sound, but you will get the “core” DTS audio stream that is embedded in the DTS-M stream (I can verify this with the Blu Ray disk Condemned that I have).

As Homedad noted, you will need a receiver with HDMI 1.1 or greater to hear Lossless sound from the PS3. The PS3 does not have analogue outputs.

The A35 decodes both DD TrueHD and DTS-M. I’m not certain, but I think the Samsung has a player that decodes all the formats as well with a newly released firmware update. No others do from what I understand. The Toshiba HD-X2 is also rumored to have a new firmware update coming out soon to enable DTS-M and DD TrueHD decoding. Hard telling if it will work correctly as Toshiba’s firmware updates tend to come with bugs that need additional firmware updates to address. (for that reason, I am hesitant to buy an X2 and am probably going to buy the A35 because it works correctly out of the box)

If you decide to use a non HDMI receiver and use its 7 channel analogue inputs, you will not be able to use the receiver’s Bass Management functions and will have to rely of whatever the source player provides, and you will be limited to only one device unless you like to pull and plug in different device cables every time you use a different player.

The other option of course, is to buy a HDMI 1.3 receiver that is KNOWN to decode DTS-M and DD TrueHD. The new Denons and Onkyo’s do this. I’m not sure about the new Yamaha’s or any other unit for that matter……I stopped reading the AVS threads a while ago. There is a debate going on (which I have no opinion to who is right) that there is an advantage with the audio processor doing the decoding verses the player. If the player does the decoding, it will send a multi-channel PCM audio stream to the audio processor. If the audio processor has the ability to recognize and decode the codecs, the player will send the audio processor a lossless bitstream audio stream to the receiver and the receiver decodes it to PCM for further surround processing.

Some folks think the audio processor will do a better job at decoding the data, others feel this is hogwash and an X is an X and an O is an O so there should be no audible differences. This is a debate I do not care to get into any more than speaker wires, speaker break in or DAC comparisons….. Not worth the effort to me.

Bandwidth limitations are something that I’m not too sure about. I’m not sure if Toslink or Coax can carry a full 24 bit / 96 Hz X 7 channel data steam (DTS-M and DD TrueHD), PLUS 1080P/60 video data with 16 bit True Color. I think it may be beyond Toslink capacity, but again, I’m not sure. It really doesn’t matter anyway seeing how HDCP is embedded in the HD data streams and only HDMI provides the required handshake data path for this to occur.