"So Theta should do HDMI with multi-channel LPCM 96-24 as quick as possible at reasonable cost. "
I certainly think so. Getting HDMI v1.1 to the level of what the MC-12HD could do would be a large jump for Theta owners. Even more so then MC-12 owners because MC-12 owners can still apply all processing to the multi-channel analog outputs of a HD-DVD player for L7, room EQ, bass management and so on. The MC-12HD just adds the ability to bypass the analog stages in the player and the A/D in the Lexicon to keep the signal all digital. The CBIII can't process the multi-channel analog outputs at all so gaining HDMI v1.1 would be a very large improvement for Theta owners.
"When Theta designed the Casablanca, Dolby Digital and DTS were in the pipeline.
No one had heard of 96-24 or Dolby Digital Plus, Dolby True HD, etc. Theta provided a product that has been upgradeable and lasted me now almost ten years. Pretty unheard of in the industry."
I understand, but you are again backing up what Andre said. Card cage designs are not the end all be all for upgradeability. If it was designed making certain assumptions (for example seperated audio and video signals) the card cage design becomes a hinderance to moving further.
"imaging these days this wouldn't be all that difficult or too costly, at least to incorporate in the inboard digital processing."
The EQ itself as long as the unit has the available DSP cycles is relatively easy. The far more difficult part is automating the measurement and setup phase of the EQ.