Anthem STR "Convert Analog" sounds much worse

I've spent all afternoon playing around with different settings with subs etc.  On this preamp, there's a setting to "Convert Analog".. This allows you to use the ARC and subwoofer outputs - hence you get to use the internal crossover, phase etc for the subs.. Really nice feature.  I'm not even using ARC yet...

But, I noticed a significant improvement in quality and dynamics with it OFF, allowing my Lumin T2 to flow straight through the Anthem.  It's louder by probably 3db too (not measured).  

I have not heard of any audiophiles more picky than me mentioning this. 

I've asked this question before about connecting the Lumin T2 this way... Am I negating any T2 dac magic by sending it through the Anthem's dac engine?  I was told NO.  But it sure sounds like it now!

Again, I'm not using ARC yet, maybe that's where I'll hear a significant improvement but as for now, I like running my subs from the preouts (giving me no xover so speakers play full bandwidth).  

Anyone in dallas want to come teach me more about  this?