according to the anandtech article I read, you do need bitstreaming and DTS-HD MA or True-HD for 7.1 over HDMI.
What I said isn't confusing at all, it is wrong though (not my fault, the article was wrong and I just repeated it).
It is possible to do so via PCM. This means that DTS-HD MA, True-HD, and bit-streaming provide even less benefit. Because PCM is lossless digital and allows 7.1 over HDMI...
here is a related forum discussion:
http://www.avsforum.com/avs-vb/showthread.php?t=832787
The issue is that due to space constraints (PCM files are too big) all PCM files included by studios are actually of reduced quality (to cut it down to about 6GB @ 3 hours instead of 12GB it will take for the master quality). DTS-HD MA on the other hand lets you get the master quality @ the same 6GB thanks to better lossless compression.
So ideally you want a disk with DTS-HD MA or Dolby True-HD data on it... BUT, you don't need to have any special support in your video card.
According to wikipedia:
What does that mean? it means that if you have HDMI 1.1 (or higher), then the only thing bitstreaming does is slightly reduce your CPU and RAM usage.
without bitstreaming, your player will convert the DTS-HD MA stream into PCM (lossless to lossless conversion, no data is lost) and send it digitally over the HDMI link, it will do up to 7.1 surround with no problems.
with bitstreaming, your player will send DTS-HD MA stream as is over the HDMI link, to be processed by the sound AV receiver.
So, the only thing you gain is a slight reduction in CPU and RAM utilization, hurray! useful only if you are playing on an underpowered HTPC, anything with a proper CPU and enough RAM doesn't need it.