The "EXT IN" and digtial for DVD are two different source inputs is what I was getting at. On my receiver, like most I'm sure, I have either an assignable digital input or a dedicated analog input for each source such as DVD. You would NOT connect both the stereo analog to the "DVD" source input and then also connect and assign a digital input to that same source in the receiver. My receiver allows this and the ability to switch between them, but since it gives priority to digital over analog, the analog would never be used unless I manually selected it. "EXT-IN" is a completely separate source from DVD, the same as TAPE, CD, VCR, etc... are.
ONLY if you use an ICBM is their statement true: The signal will go through the "EXT IN" on the receiver so bass management is already bypassed (in most cases). With the player, if it is not set to output full range signal, you will be sending a crossed over signal to a crossover which will again apply a crossover function to that signal, so you do not want to use the bass management function of the player - all main channels should be set to large. If you are NOT using an ICBM or other external x-over, then yes, you must use the receiver or player's x-over.