In short: You want to use a USB audio interface, connect it to the AVR over S/PDIF, and play native DSD.
No!!!
Main purpose of that kind of equipment is to provide highest grade of analog signal possible. It is connected to an high quality analog headphone or stereo amplifier.
The S/PDIF Out is just an addon, which may become handy sometimes.
No one would come up with the idea to spend hundreds or even thousands of Dollars to use that kind of equipment as a simple USB to S/PDIF Converter. Meaning and purpose is a High-End Digital to Analog conversion. Nothing else.
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Theory: I think the problem is the proprietary ASIO driver of your USB audio interface.
The proprietary ASIO driver is just a solution for Windows in order to bypass the Window's own Audio Engine which have certain advantages in combination whith Foobar.
The proprietary ASIO isn't needed for Linux or Android and also in Windows WSAPI in exclusive Mode shall work, the say.
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I think the problem is a completely different one. That kind of Interfaces just expecting raw data in PCM or DSD (see specs above). There should be no magic to feed them by just passing the data from the files to the interface.
With one exception...
Since not all audio is saved are PCM or DSD Files an additional layer is needed to unpack or convert files like FLAC or MP3 etc. to PCM. ...This job I guess is already done by FFMPEG.
That means we just need a Conrolbox "USB DAC Direct" which is passing the data
1. from PCM/DSD Files directly to the Interface
2. from other Formats via FFMPEG as PCM to the Interface.
By providing an "USB DAC Direct" Mode there is no reason for LibreELEC to pass DSD Files through FFMPEG for convertion to PCM. Just let the USB Interface and its High End DAC do the job it is intended to do... namely convert PCM and DSD Data into an analog signal.
For compatibility reasons and DSD there could be an additional Option for packaging native DSD Data from the Audiofiles into PCM Chunks for "DSD over PCM" (DoP). That kind of interfaces can play usually both or at least one of them.
Since not all Audio Files are in PCM or DSD but compressed in Flac which