That all depends. Some devices re-digitize analogue inputs, especially if there is a Dirac module involved in the output. You need to research your device carefully to make sure it is doing what you think it is doing.
Yes. Go to the DSP setting and Enable Native DSD Processing. I just turned it on and was able to apply Various DSP options without a PCM conversion step. Turn it on and test the DSP options for yourself. Be aware, it will increase the needed computing power.