[Scotchman]

SChimahusky - I'm fairly certain your statements are not accurate. I got my home theater back in 2009 and at the time did a great deal of research on this topic. My components are a PS3, Pioneer 1018ah-k a/v receiver, and Pioneer 5020 Kuro. I have the PS3 hooked up to the back of my receiver via HDMI and then another HDMI from the receiver to the tv. The PS3 outputs the audio compressed as PCM via the HDMI. The receiver then handles the decoding of the audio and outputs it as multi-channel surround sound. My understanding is that the optical audio can only produce digital surround sound (i.e. Dolby Digital, DTS digital, etc), whereas by doing it via HDMI and letting the receiver decode and output I am now getting "HD/lossless" audio. My receiver can decode and produce the lossless audio tracks such as Dolby TrueHD and DTS Master Audio.
 
Also, with two years of listening enjoyment with this setup I can definitively state that my blu-rays and PS3 games come out in 5.1 surround and I am now also loving listening to the emulated surround sound of my Denon D2000's hooked up to my receiver.