Please see my earlier post where I talk about how DSD is handled within Hugo:
Yes in essence it gets converted back to the original DXD master recording within Hugo, with all the DSD HF distortion and noise removed.
Why do you assume all DSD recordings began as DXD? One of my jobs is as tech advisor for NativeDSD.com, a label co-op website where we sell stereo and multichannel DSD recordings. And yes, if the DSD was edited and mixed out of the box then Pyramix converted it to DXD for those edits or EQ's. However, many labels, like Jared's Channel Classics (the owner of the NativeDSD website) don;t go there. Jared does all his balancing and session work before the production recording, so no EQ or edit is applied. Worst case it's a millisecond time slice. Same with Cookie's stuff on BlueCoast. She mixes in the box, before it goes to the Sonoma/Pyramix, so no DXD. And Pyramix 9.0 allows for DSD-level time slicing, too. EQ? Well, yes, then the thing becomes DXD.
Edited by ted_b - 6/2/14 at 5:39am