I don't think it matters if you run bitstream and let the Cary do everything or you send it PCM (which is all you can). PCM is not an analog output, so both should sound the same.
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My PS3-80 has a DSD logo on its side. I read that those units can output a DSD bitstream, but I don't have a processor with HDMI to try it. Some processors are said to be unable to both decode a DSD bitstream and do digital room correction, but Kal Rubinson has written that he observes no degradation in sound quality when going from DSD to PCM.
I assume the OP has read the Cary Cinema 11a/v thread at AVS.