Since I work 2nd shift I also usually watch movies pretty late. I also live in an apartment, so bass is always an issue. Sometimes I lower the level of the sub or turn it off all together(depends on the movie).
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Does the Dolby Digital compression feature acutally work, and if so, does it work with DTS
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I guessing that you are talking about the Midnight Modes. On my receiver the Midnight Mode(s) only works with Dolby Digital signals and not DTS. I'm sure that there are receivers out that have an option like this for DTS, but mine doesn't. I find that using this mode helps a little, but I still have to adjust the sub.