I don't think you're going to get the LFE track if you use a stereo analog connection--it's only going to give you the main channels, at least on any setup I've ever seen. If it did put the LFE in, it would probably cause clipping and distortion . . . hmm. Or are you just using Neo 6 mode for it straight 2 channel sources? I'm a bit confused.

Discrete 5.1 can sound really good compared to upmixing, but it depends on the mix--sometimes it's done wrong and sounds gimmicky and fake. Having an uncompressed soundtrack is going to sound better than lossy in most cases, this is true. Depends on the quality of the source.