With Tidal MQA pass through either on or off the 818 still displays 352 on 2L material so that makes me believe the 818 decodes to the maximum rate available and then repackages it using MLP for transmission to the DSPs as you said. The SEs recognize that rate and the legacy DSPs stay at 96/24. Strictly MHO.
A perfectly valid conclusion Ken
But just to emphasise again that what I've highlighted above in Red is EXACTLY what happens with the Explorer when fed from the Tidal app... with MQA Pass Thru set to On or Off... i.e. all the lights light up for both settings...
And as all the lights light up... you might come to the conclusion that the Explorer is being fed with 24/192/352 from the Tidal app... whereas we know that it's only receiving 24/96 data from the 1st stage unfold carried is carried out by the Tidal app.