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Contour Digital Output Options - Which is Best?

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The Contour settings menus let you set digital output format.  The options available are (this is what the manual says):

Pulse Code Modulated (PCM):  This is the default format of digital output

Dolby Digital (Labeled AC-3 in the actual menu on my box):  If you have a unit that can receive and decode Dolby Digital output, use this option.

For my setup, the Coutour HMDI output goes first to a Onkyo Receiver, and then on to my Sony TV via HDMI.  I have HDMI pass-through on the receiver turned on, so that the video and audio signal goes to the TV whether or not the receiver is on.

I have the Contour now set to output AC-3 audio, and the receiver handles it fine.  (It also handles the PCM input fine.)

My question:  is the PCM option "Linear PCM"?  LPCM is an uncompressed signal which theoretically provides improved quality.  I know some TVs can only handle the two-channel standard PCM, but that is not the case for my receiver or TV.

Why does the manual recommend the AC-3 option?  I have been told that the LPCM provides the best audio signal.  (I honestly can't hear any difference between the two formats from the Contour.  I care more about "quality" when playing BlueRay disks.)

David


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