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There is no D/A convertor. The Equibit chip changes the PCM signal from the CD player into a PWM signal. The signal is kept "digital" all the way through the amplifier. Right before the speaker connectors are second order passive low pass filters that remove the switching frequency from the signal. Here is a link to a .pdf file from TI that explains how the Equibit chipset works: http://focus.ti.com/lit/an/slaa117a/slaa117a.pdf
This connection is the best connection method for enjoying DVD Audio sounds. When a DVD Audio disc is played back, the original high-quality sounds can be reproduced only using this connection
From what I've read...it seems like the weak points of most of these lower cost digital receivers are the DACs, ADCs and power supplies. Given the price point these recievers occupy these weaknesses are understandable. It would be nice if one of these manufacturers made a no frills affordable two channel amp with a few inputs and a decent power supply...no dsp, dacs, adcs. I guess they don't believe there's a market for 2-channel gear anymore though.