I've tried it with the RX-V3900 set to "Straight" mode as well and still got 5.1 channels to play even though PCM stereo was selected.
Whether it's a discrete signal or just spill over from the 2 channel audio I cant be 100% certain. Probably the latter since I just repeated the same experiment with the BD version.
....and the PS3 indicates only 2 channels on the input signal indicator when PCM Stereo is selected (unlike the HD DVD through the HD A2)
As far as post processing goes, I prefer to utilize my front presence speakers for Concerts/Music videos,
I customized my "Entertainment" parameters as one of my saved slots on my remote to disengage the rear surround speakers and engage the front presence channels.
(You cant use the presence speakers in "Straight" mode, you have to select a sound field mode.)
I've A/B tested and people I've demo'd it for all agree the presence channel in Entertainment/Music Video mode enhances the concert experience.
...now that I actually have a lossless DTS HD 5.1 track I can access, (instead of just a PCM Stereo track ) I will have to make a new test/assessment.

My reasoning for this is that a fuller front sound stage with vocals raised to center screen is much more pleasing in a concert environment,
than having the extra rear surround channels, that are better (IMHO) suited to Action/Adventure movies. (for those I use Straight mode)
I also have a Drama Movie setting that uses the front presence speakers for Dialogue Lift,
where better centered dialogue is more important than rear effects/surround material.
(for those of us with projectors and Big Screens , the center channel sits very low,)

Dialogue Lift uses the presence speakers to virtually raise the center channel to a phantom center by sharing some of the centers signal.
It's the next best thing to an acoustically transparent screen with a centered speaker behind it.
(I cant do that, my drop down 120" motorized screen has a wall mounted Kuro behind it)

Yamaha has been doing some of the best DSP work for decades and was doing Front Height/Wide over a dozen years ago,
and its just catching on with other brands within the last couple years
Love my Yamaha Receivers, my first was back in 1980 and I've owned at least 6 others since then.
the 3900 is Rock Solid and I doubt I will be upgrading it any time soon, not even tempted to go 3D.
...sorry for going O/T
Played most of the Eagles BD last night and it really was better than the HD DVD (that was also limited to 1080i on my A2)
The BD in full 1080p and DTS-HD Master Audio took everything up a notch on my favorite Concert Vid.
Only thing I miss from the HD DVD is you could scroll through the menu system to cue up any song order you wanted on the fly while the current song still played uninterupted,
With the BD your menu is separated from the video and doesn't even play background music at the start while scrolling through menu selections.
Edited by PioManiac - 3/1/13 at 8:56am