I just read in the rotel manual that you are correct.
"The existing optical and digital connection standard does not provide sufficient bandwidth for multichannel high sampling rate MLP recordings. Therefore, DVD-A discs with these high-resolution audio soundtracks must be decoded by the DVD player and the resulting analog signals sent to the rotel's multi-input."

It also seems that the Rotel can re-direct bass from all channels and put them through a 100Hz low pass filter, thus creating a summed mono subwoofer output.

Thanks, you gave me the key. I always thought the digital output was the highest quality ....