For a mono film, it is generally better to let Pro Logic II (or another comparable decoder such as DTS Neo:6) collapse the two channels to your center speaker. If played back only through your left and right mains without the center, you rely on those speakers creating a phantom image between...
We all have our preferences and biases, but there isn't much technical reason to use Bitstream output over PCM if you're only decoding to 5.1. The Dolby or DTS compressed signal has to get transcoded to PCM somewhere in the chain regardless. It doesn't really matter whether that happens in the...
OK, got it. So long as you're connected by HDMI, I'd still advise setting your Blu-ray player for PCM and leaving it there. No need to use Bitstream at all in your scenario.
Every AVR I've ever owned since the introduction of Dolby Digital in the late '90s has been able to apply Dolby ProLogic to a DD2.0 track. Yours must have been a real cheapie model if it can't do that.
You say you don't want to switch back and forth from PCM to Bitstream output in your player...