There's just no good reason to make the outlay on a HT system and go back to using DTS Connect / DD Live over TOSLINK. As you stated originally, your goal out of this is to bitstream lossless mutlichannel formats like TrueHD and DTS-HD MA (and possibly to ensure compatability with HDMI-only sources like PS5?). The way to achieve that is HDMI to a receiver that supports those formats. Figuring out how to make this work, within your budget and with speakers you'll be happy with, should be your focus. The rest is just noise that will get you sidetracked.I guess I'm easily impressed since I was fine with my Z-5500 system, I've also never heard what I assume the audiophiles here would call a 'proper high-end' home theater system before. I know the Z-5500 was considered entry-level and it was excellent at what it did and I thought the Polk setup I was going to get was considerably higher in the quality department. I do have a Sound Blaster Zx and i'm aware an option would be to encode everything to 5.1 DTS/DD on-the-fly and connect to a receiver via optical, but a setup like that would be significantly more expensive.
Also, don't worry about what "audiophiles" consider great; after all, this is an industry that manages to convince idiots to pay $2,000 for power cables and $600 for ethernet switches because they somehow magically make digital signals better. I find that most enthusiasts just want to keep you from wasting your money on something you wind up not enjoying. As always, the best thing is to demo speakers yourself before committing, although I understand that's not always possible.