"is anyone able to explain what the 'HDMI audio de-embedder' is actually doing ?"
As I understand it (and I use one), the device splits off the digital audio signal from the HDMI stream and outputs it via coax or toslink (or both) to a dac that's capable of reading the higher quality digital stream. From thence, it goes to your amplification. I use a Sony BDP s370 for blu-ray and sacd (it outputs 24/176 sacd) and an Oppo for DVD-a, and there is a clear and noticeable difference from 44.1 files. My whole blu-ray/sacd/dvd-a setup, including the de-embedder, cost >$500 and was a welcome upgrade. My dac, which will read up to 24/192, is a TacT 2.2x (modded).