Well that's not going to help your PS3 if it can't shift to PCM either.
I think your stuck with only having DTS from it's internal DVD player. Try playing a DVD to prove DTS works that way. It's not a Med problem. Passthrough is needed for compressed audio, and that isn't PCM.
DTS is seen as a more as a retail disk format. Many camcorders can record using AC3. This makes a logical argument for only supporting AC3 from external sources on an integrated DVD player/surround Amp.
I'm not the one with a PS3
But if DTS works only for the internal DVD drive (indeed, I don't get any sound on DTS-DVD's), why has it always worked when I had my amp connected to my PC? Did the PC soundcard sort of convert the DTS to make it suitable for PCM?
I've seen this before with integrated DVD/amp setups. The Spdif input isn't there as an upgrade path, allowing you to add a new DVD player or bluray player and use the amp just as an amp. It's there to support DAP devices you might also have, such as a Creative Zen.
Well, that's clear as it can be, I think. Pity though that the Mede8er can only "compress" to 2- instead of multi-channel.