Sorry for the delay, the tech from Onkyo returned my call and again confirmed that the NR708 and higher models all convert digital input sources to analog for the internal amplifier section and also supply output through the pre-outs!
I really despise the previous tech representative I spoke with for telling me that the NR708 only outputs analog input sources from the pre-outs and causing all this confusion. Sorry to all if I seemed to question your input, I appreciated all of it but was duped by an "official" Onkyo rep!
I was glad to hear that the NR708 did in fact have proper pre-outs but then I was instantly worried that the pre-out section on my receiver was bad....
Well they really dug into the issue for me and found that the HDMI signal they were sending to the receiver from the PS3 was in Bitstream format and once they switched the output to PCM on the PS3 the pre-outs started functioning. Instantly I remembered that I had read an article about how switching the output on all your devices to Bitstream vs PCM was going to provide much better sound output from the AVR and of course I did just that when I set up my new receiver
Now I need to dive into all my input devices and switch them back to PCM output to confirm the pre-outs are now functioning from the HDMI input sources with those settings.
Unfortunately I am now stuck at work and will not be able to test this out until later ... If they do in fact work properly then I want to test if you can actually output from the front L/R pre-outs and have the main front speakers powered by the Onkyo at the same time, unless someone here has already tested this for me...?