I have hooked the PS3 with HDMI to the projector( for Video) and Optical audio to the Mark Levinson(Audio). The picture is wonderful BUT the audio sucks. I don't think the optical out does DTS. My preamp automatically goes to prologic!!!!!!! Would a stand alone Blu-ray DVD player be any better. Upgrading the preamp is a major undertaking.
The PS3 does regular DTS decoding but not DTS-HD, at least not yet. However, you should check the audio settings on the ps3 set up menu and make sure that DTS is an active option by selecting it from the audio list in the set up menu. I have a ps3 and I'm getting DTS output.
I also get DTS output on my PS3, but the problem I get sometimes is when I watch a regular dvd and when it upscales it gets pixelated. I was wondering if this was a settings issue or something else. I have the ps3 hooked to my tv with hdmi.
The most common complaint about the PS3 in a HT environment is the lack of IR control as many people use universal remotes in their HT. A fairly elegant solution to that issue appears to be forthcoming...
With the way my component rack is located in my room I sit virtually right next to my PS3 and it is very very quiet. It will warm up a space but no more so than my Yamaha receiver or Mits projector. When I have all the gear going I tend to bump the AC down a couple degrees to compensate.