^What Splicer010 said.
Jugglebob, multi-channel out setup is covered pretty well in the manual. If you didn't get one with your purchase, download it for free at the Toshiba website.
I suspect you may have outdated firmware, as bitstream issues have been reported with one or two of the earlier versions. Are you currently at v4.0? If not, update your firmware and try bitstreaming again. Digital Direct ON is what permits bitstreaming in the first place, so theoretically, there shouldn't be any problems with that setting.
And just so you know, the high resolution audio output quality with the A35 vis-a-via any late model receiver should be pretty much on par with each other. The problem with the A35 is that the output volume for HDMI/multi-ch PCM is lower than the raw stream. Not too familiar with Pioneer receivers, but my Onkyo has a feature that allows for increasing input levels of connected components ("IntelliVolume"), making it easy to level match the A35's raw stream output with its multi-ch PCM output. Some players allow for such an adjustment internally (e.g. PS3), which is actually the preferred method. But it's nice to know certain receivers have it on hand. Perhaps your Pioneer has this feature...?