So If I connect the dvd player via the digital input I will get the filters?
Yes. You would be using the speaker level and bass management settings in the SP1.7 setup, and also have access to the additional sound formats.
If that is true the benefit of the 5.1 channel RCA inputs are the pass through with no digital processing?
Yes. If you had a Blu-ray player, since the SP1.7 has no Dolby TrueHD or DTS HD Master Audio decoders, you could use the 5.1 analog RCA outputs of the Blu-ray player (if so equipped - not every Blu-ray player has them), and you would be using the Blu-ray player's internal decoders and speaker level / bass management settings.
Will I be able to toggle between the two (5.1 RCA and Digital) via the menu for dvd setup?
Most players should be able to output the digital audio and analog 5.1 audio outputs simultaneously. You should then be able to simply switch between the two inputs on the SP1.7.
You would then be comparing the difference between using the DAC (Digital to Analog Converter) in the SP1.7 and the DAC in the M55 player. You may prefer the sound of one over the other.
Steve