Yes it will because DD is more compressed than DTS to begin with so since it will have to be compressed again for the end product it makes sense to use the less compressed audio as the starting point, no?
I still haven’t fully decided if I’m even going with full 5.1 anyway. I might stick with dolby surround to make things simpler. Also That way recompresses will be less damaging as each channel will have more bitrate afforded it, and it will still upmix properly.
Right but what I am trying to point out, you wont loose anything if you convert the DTS to 5.1 or 7.1 PCM. Then Master it to PCM. (Blu ray) Sure it will take up more space but at least your not loosing anything. (PCM) (WAV) is lossless.