AirPlay only supports up to 48/24 but up to that it's bitperfect, it's sent as an ALAC stream. Actually even if you use the volume control in iPeng; the volume information is sent separately from the audio information, the volume control is not being done by applying a gain to the digital data like in the Squeezebox (the Receiver on the other end of the AirPlay connection might still do that but iPeng and AirPlay itself keep their hands off the data; at least unless you apply an equalizer) so you can design an AirPlay device that actually does analog volume control.
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