"I'm not sure if PS3 can output SACD --> PCM over HDMI or it's outputing DSD signals."

It converts DSD to PCM for output over HDMI.

"A test here shows how PCM / DSD handle "Square Sound Wave"

Jumping from 44k to 96k yields big improvement, there is still quite an improvement from 96 to 192."

All a square wave is is a fundamental sine wave with many odd order harmonics. If you can't capture those odd order harmonics you no longer have a square wave and will be seeing the fundamental. A square wave is basically a sort of bandwidth test. To capture a 10kHz square wave you need to be able to capture those odd order harmonics... (30kHz,50kHz,70khz...etc...etc). At 44.1kHz sampling rate you can get the fundamental but no harmonics, at 96kHz you can get the first odd order harmonic, at 192kHz sampling rate you can capture 3 of the odd order harmonics.

You can sort of see this here:
http://switch-box.com/Lexicon_analog_bypass_measurements.html

Shawn

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