I have always thought the digital optical cables had better sound than any analog. Not sure if the chromecast audio does anything different than just send the audio from the jack.
Yes audio video receiver. The surround sound processing even in cheaper models is great. You can take 2 channels and make it into 7.1 channels or more
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I think you are going to have to use some kind of surround sound processing to get anything beyond dual channels. Dolby pro logic II works great on my avr.
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