Onkyo 805 and PS3

The display is correct... the PS3 is doing the decoding and sending the signal as a multichannel output to your receiver. The PS3 cannot send the unencoded signal to a receiver.

The ps3 is just as capable of bitstreaming DD or DTS as the oppo. You just have to choose bitstreaming instead of PCM in the appropriate menu. The only limitation to bitsteaming occurs with new blu-ray formats such as TrueHD and DTS-HD MA lossless audio. The only alternative is to decode these in the ps3 and send them out as PCM which reads as multichannel on the onkyo. You are getting the full benefit of the lossless tracks when you have it configured this way, just as if the onkyo decoded them internally.

Not sure if the 805 suffers from this, but on my onkyo pre, it failed to provide the necessary 10db boost to the lfe channel when reading multichannel. The lfe channel is purposely added to the audio track at -10db to prevent overloading the input path since lfe is so much louder than the other channels. When the processor receives bitstream, it automatically boosts the lfe bass 10db. Some processors, however, don't automatically boost the bass when reading multichannel. So if the bass seems thin, you'll need to boost the bass on the lfe channel manually by 10db. But you might have to play around with the different bass settings for different inputs to find the least painful way of configuring this.

(I think my onkyo only allowed -10db settings not +10db settings. So I did something like boosting the general lfe by +10db, then used -10db for all inputs except multichannel which was the same as just boosting the multichannel.)

I also have the 805 and a PS3, what you are seeing is correct, the 805 reads the lossless audio tracks as "multichannel". Do this, when playing a movie hit the pop-up spec menu on the PS3 for the movie, it will tell you exactly what audio track (TrueHD, DTSMA-HD, DD+...etc) is playing along with a bunch of other tech specs on the movie.