Does lossless audio over Apple AirPlay have preserved audio quality?
I always thought that the Express had a decoder inside, so it could just receive the digital data. Much more robust against bad connectivity.

Also, from Wikipedia:


  An often-overlooked feature of the AirPort Express is that it uses an audio connector that combines a 3.5 mm jack socket and a mini-TOSLINK optical digital transmitter, allowing connection to an external digital-to-analog converter (DAC) or amplifier with internal DAC. This allows iTunes (and other applications which can stream to the device, such as Rogue Amoeba's Airfoil) to output a bitstream instead of analog audio. DTS-encoded CDs ripped to Apple Lossless audio files which decode as digital noise in iTunes will play back correctly when the AirPort Express is connected via TOSLINK to a DTS-compatible amplifier–Decoder.