On the video side, scaling and de-interlacing is the hard part and so many TV's, receivers and players do it poorly . It's a matter of processing and there are really only two (ABT and REON) processors that do an exceptional job of those tasks. At least that is the current SOTA. Perhaps good processors will get cheaper, and I hope they do. But for now, they aren't. Many manufacturers, have their own proprietary scaler/deinterlacer processors but they fall short. Sony is the first that comes to mind as having a good, but not great, processor. Toshiba had a good one a couple years ago, but it's long gone and has been superseded by the current SOTA.
On the audio side with regard to PCM vs bitsreaming, there is one issue I have not seen discussed in this thread and I am not well qualified to explain it. It is a jitter issue with HDMI. If I am not mistaken, and please feel free to correct me, PCM is not re-clocked it is just D/A converted. A bitstream is re-clocked, decoded and then D/A'd thereby reducing jitter.