[RKCRLR]

I asked this question in another section but didn't get any responses so I thought I'd try here.  

When I'm watching US ATSC TV programs transmitted in Dolby Digital, Kodi transcodes (if that is the right term) the audio and my receiver (Onkyo TX-NR646) shows the input as 5.1 PCM and shows the output as 5.1.2 Dolby Surround.  I have passthrough enabled but I've been told this is normal.  

If I record the same show my receiver shows both the input and output as 5.1 Dolby Digital when I'm watching the recording.  However, there is a slight delay before the audio starts again when I skip forward or back.  

If I tell Kodi in the system audio settings that I do not have a Dolby Digital (AC3) capable receiver then my receiver shows the input as 5.1 PCM when playing a recording and shows the output as 5.1.2 Dolby Surround.  However, the audio delay is eliminated during skipping.  

From a practical standpoint am I losing any audio quality by having Kodi transcode the Dolby Digital to 5.1 PCM?

This is normal - Passthrough of AC3/DD hasn't supported in Live TV on Kodi for many years.  What happens instead is decoding to 5.1 PCM (*) which is the standard HDMI uncompressed audio format.  All that is happening is that Kodi is decoding DD to 5.1 PCM rather than your AVR (your AVR would decode the DD to PCM itself otherwise).  In many used cases there should be no quality difference between decoding in Kodi and decoding in your AVR.

If you stick with PCM output for recordings as well - then, as you say, your AVR doesn't give you the delay (which is probably caused by it constantly switching between PCM and DD decoding).  

The only possible disadvantage to this is if your broadcasters use dynamic audio metadata (more than just 2.0/5.1 switching) in the DD stream on a show-by-show basis (I don't believe PBS, ABC, CBS and NBC do as that would require affiliates to receive network metadata and handle it properly, Fox is slightly different as the network deliver pre-encoded transport streams but I haven't heard that they do.). If that's the case then that metadata will not be passed to your AVR - which may impact some 'late night listening' modes if they use the DialNorm (Dialog Normalisation) information in the stream.  I doubt it's a major issue.

I believe that the reason PCM decoding is used rather than DD passthrough in Live TV is that it is easier to cope with reception errors in the PCM domain (you can error conceal in PCM)  than in the compressed domain (where you can't easily error conceal and instead have to drop or repeat compressed packets to replace any that were missing because of interference in a less than perfect transport stream you received off-air)

(*) Technically DD to PCM conversion is usually described as decoding rather than transcoding - as you are not re-encoding it to a new codec - you are decoding it to the most standard basic audio format (PCM) that is uncompressed.  You are not introducing a quality loss in the way that Transcoding to a lossy format would.

Thanks!