I'm not sure what you think transcoding does, but it most certainly does NOT necessarily mean "down convert" or down sample! You most certainly can transcode from one lossless format to another with zero information loss (ex. FLAC to Apple Lossless or even WAVE).
You said... "Some of them will use uPNP to connect to "media servers" but the media server has to stream the FLAC so it down-converts as it transcodes (translates digital info to music) over the network for the receiver to play"...This is incorrect- there is no translation of digital info into music taking place by the media server per se, transcoding simply changes bit information into something the end device can interpret. The server simply streams the bytes to your end device (DS, Receiver, etc.) that has a built in codec internally that translates the stream to music.
You mention you have both a PS3 and a 906- now what you need is a program called Asset UPnP @ dbpoweramp (my favorite for ease of use & more importantly sonically). What the programs does is transcode FLAC into WAVE or LPCM- which your devices both have codecs to decode natively. In the transcoding process no info is lost- lossless to lossless= lossless! As a matter of fact Linn recommends the program for their DS's.
I have the same combos as you mentioned and either through the PS3 or my 906- whether streaming M4A, WMA & FLAC (all lossless) sounds absolutely terrific! So much so that I'm just ripping & boxing my CD's now.