Need guidance from the good folks here. Currently, I have an HTPC based on HP Slimline (nice form factor). I pretty much have everything configured nicely, but suddenly I have this itch to get a real sound card instead of the onboard sound.

The current onboard sound is based on ALC883 chipset and only the S/PDIF out is used to connect to the receiver. I'm thinking of getting one of the CMI8770 based soundcard. My question is, will the improvement be worth it?

Here are my thoughts, correct me if I'm wrong:
1. Movies from DVD are using AC3 or DTS passthrough, so there won't be any improvement.
2. Downloaded movies are usually encoded using mp3. Can the soundcard do hardware DD or DTS encoding on the fly? Currently alsa can do the stereo upmix using a52 but will the soundcard based upconversion be better? Can the soundcards do the hardware encoding in linux? More importantly, will the result be better than the receiver's upconversion (Dolby Pro Logic and what not)?
3. For music (mainly mp3), will there be much improvements vs onboard sound?