Yes, the PCM56 DAC chips are limited to 16 bit input.
However, the Stockholm utilizes a new "digital receive" which is capable of rendering 24bit/192khz audio; I've tested/compared the new Stockholm with my Havana and the difference is night and day when using hi res flacs...after processing, the analogue output is handled via the typical PCM56 DACs...
I'm finding this thread quite confusing. The CS8416 is a digital audio receiver chip which allows the send and receive of digital audio data up to 192 khz. I don't think it does any "rendering" of audio. That job would be up to the DAC chip which in this case is the old PCM56P which only "renders" 16/44.
Even MHDT's website says the "Stockholm DAC is capable of up to 24bits/192kHz digital signal inputs yet remains driving legendary PCM56P R-2R digital to analog output."
I love my Havana and only listen to 16/44 material. In the future, I want to take advantage of all the 24/96 and higher-res files available online. I don't want my DAC to ignore all those additional bits, do I?