I've tired it in the direct mode (and different connections) and currently just have it plugged into one of the free stereo jacks, in stereo (no DSP) mode. It sounds the same when hooked up either way.
Rob, your needle drop sounds great to me. I hear lots of detail, soundstage, and layering (for the lack of a better audiophile word). With mine, the detail is ok but I don't get the nice three dimensional soundstage. When I'm playing the needle drop, I have it running into my AVR via HDMI, so I'm using the AVR's crappy DAC.
My AVR is really just a "temporary" component. I'm just waiting for the right preamp to come along that will fit my needs while in my price range before I change things up. For what it is, it doesn't sound too bad when I'm not using the internal amps, but it's what I have to work with right now. I do have a old Pioneer AVR with a built in phono stage that I could get out and hook up if need be. It doesn't have any preouts so I'm not sure it would be a fair comparison.
When I get a chance on Sunday, I'm going to take a close look at how everything is setup in regards to my TT. I have serious doubts about it being level and I know that the VTA is not level. Since the VTA is not adjustable on it, I might be able to get satisfactory results with the addition of a mat.