I'll start by addressing #3: Unless you're talking about a source with a dolby digital or dts audio track [in any of their iterations] you are not 'bitstreaming' the audio to your receiver. Any other source [flac, mp3, wav..] will be decoded to PCM which will be sent over HDMI in perfect fashion. Depending upon how new your yamaha is you can tell what exact signal is being received by going into the "option" page [older, these also have a "setup" page] or the all encompassing on screen menu [newer] and going to the "signal info" page. If you are bitstreaming this will tell you the codec being used. If not it will tell you what flavor of PCM it is receiving. If you are receiving PCM you will want this to match the source: for instance if you're playing back CD audio it should be 44.1/16.