I have a Sony HT-SS380 surround-sound home theatre setup. Recently, the receiver seems to have decayed, and now it refuses to transmit surround sound from my PS3, everything from Dolby Digital up to Linear PCM and lossless formats. I've tried resetting it to factory settings, but that hasn't worked; it alternates between no sound and harsh buzzing. And I know it's not the speakers themselves; the test tone works fine. It just suddenly doesn't understand surround sound anymore.
I've tried moving it down to Bitstream, to see if the receiver still understands TrueHD and DTS-HD MA, but my PS3 apparently doesn't want to send those signals, and tries to send Linear PCM anyway. My PS4 is no better; it's dead-silent in LPCM mode, but fires up when I switch it to Bitstream, at least in the main menu. When I try to Bitstream a Blu-Ray, it goes quiet again.
Sony recommended I send it in for a $150 repair, which I'm none too pleased about, and I'm also not interested in dropping that kind of scratch on a brand new receiver, especially since I got this system because it had a simple, compact receiver, and not a full-sized tank with a million ports I'll never use. The only HD source I really use is my PS3, so I wouldn't mind a simpler solution to get its surround sound out to the perfectly good speakers I have.
It's then I remembered an older surround solution I had; one of those little "5.1 AUDIO GEAR" decoders I had gotten off eBay, when I used PC speakers for surround. It worked well, even though it only had TOSLINK inputs, which was fine for the PS2 I had back in the day, before I upgraded to the system I have now.
I've tried looking into if there's a new HDMI version of that little thing, and I've had a few results. It seems to convert the HDMI signal into 6-channel RCA analog, but if its still lossless, that's fine by me. It has three modes: "PASS", if I'm just sending it to a receiver, "5.1" if I want it to convert to 5.1 LPCM, and "7.1" for the same. If I can take my speakers, pop off the stupid Sony proprietary connectors off the wires, and rig them up with RCA jacks, I could be in business.
I am, however, still confused by something. Presumably the PS3 converted whatever sound source it had to LPCM and my receiver wasn't doing anything except chucking the sound to the speakers. Does this thing just change the digital sound to analog for a receiver to take care of it, or can it work without a receiver or an amplifier? Would I need to use PC speakers, since those would draw their own power?
TLDR VERSION: My receiver broke and it can't do surround anymore. Since I really only used it for a PS3 and my needs aren't that complex, can I use a small decoder box and PC speakers instead of a big, expensive receiver? Could it still handle lossless sound?

Chowhound
Comic Vine
GameFAQs
GameSpot
Giant Bomb
TechRepublic