PS3 to XT-sr805?

[neos_peace]

Ok I have a PS3 (love it it rocks ) And when in-come return comes around, I will be getting the TX-SR805. Now my question is this. I know that the PS3 does all the decoding, and I know that the receiver wil only display LPCM( I think thats right) multichannel [which by the way what does that mean LPCM anyway]. does the PS3 decode all the codecs, Dolby Digital, DTS True HD, DTS master, the whole nine yards. I've read alot of the posts that relate to this and I must admit I keep getting mixed responces to it from what I understand. Does it or doesn't it. I'm confused (of course it wouldn't be a first ) I plan on eventually buying all together about $1,500 worth of electronics towards my home theater system. I'm also looking at polkaudio fro a sub, but I'm not sure on that either. thats another post later.

So to clear it up.

1. Does the PS3 decode all the codecs (I do mean all)
2. The PS3 can send signals out via PCM, bitstream, HDMI, and Optical (I'm currently using optical cuz thats my only option) Whats this about not sending out bitstream cuz I do have that option if memory serves me correctly.

Thanks for the help.