GLH,
If I'm not mistaken, many DVD-A discs DO have a DD/DTS digital track for use with a generic DVD-V player and external decoder/receivers, though this might not be the case for all of them. I'm almost certain Telarc DVD-As, for example, offer a DD track, as well as a stereo track with higher resolution than redbook CDs (24/96?).
This is definitely not the case with SACD, for which Sony specifically demands you have an SACD player do the decoding.
If the DVD-A disc has a digital 5.1 track, I would almost always let the receiver do the decoding unless your player is far superior in quality to your receiver (the opposite is usually true). The sound quality will almost always be worse when the player does the decoding otherwise.
As far as the TosLink vs. Coaxial debate, I believe any difference you'll hear is one of "expectation bias".
