I have not heard that one. Can you point me to an example? Dolby specifies TrueHD "as a lossless coding system for use on high-quality digital audio data originally represented as linear PCM". If I am not mistaken, there should no decoding(and reencoding) going on, just decompression. Source is
There's a lot more to this than reencoding audio channels, which I agree isn't a problem. Dolby Atmos is an object-based format, not a channel-based one. If you rely on the source device for PCM, then you're expecting the source device to mix the Atmos correctly down to 5.1 and 7.1. Now, most devices don't even support Atmos -> 5.1 AT ALL, what they do is fallback to the 5.1 DD encode embedded in most Atmos streams. The minimum for real Atmos object-based decoding is usually 7.1 or 5.1.2. In particular, on the Shield TV, I don't think it will even do multi-channel PCM, it will do DD5.1 but that is a
legacy compatibility feature with fairly
janky implementation. Apparently the AppleTV will output 7.1 PCM from an Atmos source. What exactly it's doing there or whether it's doing it well is another story, this is obviously a feature that almost nobody will use, so you're hoping that a compatibility feature will work well.
The VanityPro requires channel-based PCM audio and doesn't do Atmos at all. So you better be sure that your source device does PCM 5.1 or 7.1 output and that it's good at downmixing from immersive audio sources. This isn't something you can just assume will be supported. And after spending $1600 on this($100 less than a Denon 4700H, which also has room EQ and great upmixing builtin...), you're stuck with a system that can never use height channels.
The 1 use case I can see for this is basically: I have a pure-music 5.1 or 7.1 multichannel system, I have no interest in using an AVR or ever having height channels, I am using Apple Music with an Apple TV or a Bluray player and I'm fine with the 5.1/7.1 downmixes. That is... an extremely specific set of circumstances, lol. Most people with those kinds of systems already have a 5.1 signal chain that works fine with standard 5.1 music.
Speaking as someone who actually owns a 5.2.4 multi-channel music and HT hybrid system, I don't really understand why someone would want to spend so much money and lock themselves out of height channels AND(as a consequence) Auro3D upmixing at the same time, just so they can have digital outputs.
It's not like this device is even a cheap, replaceable buffer between your system and HDMI compatibility changes. It's more expensive than most AVRs...if it was like, $200-$400 then it would make a lot more sense to me, as then we are talking about something that is much cheaper and less wasteful than replacing big AVRs every 5-10 years.