Is it even possible for a device receiving the data stream over SPDIF to
know whether the data had been subject to lossy compression and then
decompression?  I have to believe that the receiver does some type of
digital signal processing that intends to improve the sound, based upon
the characteristics of the data stream.  Further, a lossless compressed,
then decompressed, data stream should be subject to the same DSP
algorithm, albeit if the algorithm is a good one it should likely
modify the data stream less than it would for a lossy one.

I'm speculating above, but does that make sense?

Certainly it is impossible for the receiver to "restore" the lossed
data, but it could certainly make it sound better to some ears than the
lossy data alone.  If I rip out random pages from the telephone book,
you may be able to get a pretty good idea which pages are missing, you
may be able to make up some pages that appear to compensate for the
discontinuities, but you cannot tell me what was on the missing pages.


-- 
jeffmeh
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