You're saying your TV encodes incoming analog audio to PCM and outputs it on the digital output? That would be quite rare and unexpected.
The problem most people have is that there's no way to get digital audio out of the Wii (unlike non-Nintendo consoles of the current or previous generation). As a result, folks have to wire the Wii differently. For example, if they have their consoles hooked up with a switch to a single receiver input, they have to set the input to analog mode for the Wii, but leave it in digital mode for everything else.
In any case, back to the original topic... Yes, the Wii has reasonably good Pro-Logic II output via the analog stereo connections, but as discussed in other threads, you may need an attenuator on both channels in order to achieve maximum quality (due to the way that the signal is overdriven / overamplified).