You are completely wrong.

The optical/coax digital outs carry the 1s and 0s directly from the disk. They are not capable (due to software or hardware limitations, big debate over that one...) of carrying DTS, DD, or other full 5.1 channel surround.

Smack!

If the DACs in the player are complete and total crap, using the optical out with a receiver with good DACs may well improve the sound.

I am the Doctor, and THIS... is my SPOON!