Greg, you have asked some good questions and the answer is simply – “It depends.” What I mean by that is that it has to do with the synergy of the CD unit with the rest of your system and the room environment you have your system set up in. The cost/quality of the CD player can make a sonic difference if your system is very revealing and you’re a discernible listener.
Whether a cd is going to sound better using digital outputs depends on the quality of the digital processing circuits in the receiver as compared to the ones in the CD player itself. In some cases it might be better and other cases not as good as the analog outputs. When you read through the lengthy posts on the Toshiba it will shed some further insights as to how a $60 unit moderately engineered and modified can sound as good as units costing 10Xs as much in the right system.
Bottom line, after living with something for a few weeks, if it sounds good/right to you then it is right in your system. One thing to remember about the quest for perfection in sound reproduction, you will never have everything perfect and you have to learn to live with compromises and trade-offs or you will never appreciate listening to music. I remind myself of that mantra regularly.
Happy listening,
Lou