With HDMI it shouldn't matter whether it's done in the receiver or the player. The only time that would come into play would be if you were using a player with 7.1 analog outputs that had vastly superior DAC's to your receiver, then it makes sense to decode in the player.
However you can't use bonus view functionality when using bitstream, so for all intents and purposes all bitstreaming does is allow you to see a different light on your receiver.
CD is 1,411 Kbps data no matter what player you use it on.
The PS3 has the ability to upsample to 24/176.4.
I think the PS3 is an excellent CD player, but I don't think you'd want to put it up beside a several thousand dollar reference CD player using high quality analog outputs/DAC's.
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