Correct, digital out means the Touch is not using it's DAC. As for whether analog out means two DAC conversions (one in Touch another in your amp/receiver) depends on your amp/receiver. Most digital AVR's do indeed need to convert analog back to digital for certain functions like bass management, EQ, etc... then convert back to analog. Many AVR's do offer a feature like "Pure" mode to bypass such double DAC conversions, depending on your gear and your setup.
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