Allright, I acknowledge not

Allright, I acknowledge not having written the most technical explaination. Good call.
However I will still maintain that a straight mapping of 12-bit data to 8-bit data will always increase the quantization noise floor and hence reduce dynamic range.
You are right again, when you say that the Sensor is a Linear Device, while image processing is a nonlinear process. Hence the loss is not exactly equal to the loss in bit scale (thats what I am reading from your Compressed NEF paragraph).
Lets just agree on the simple fact that the RAW image does contain more data and that an experienced user can use that extra data to perform image enhancements vs. the generalized processing the camera performs.
I didn't know that article about the contrast, but it goes hand in hand that it is always the weakest link that determines performance. The ADC resolution is always chosen so it won't increase the noise. Higher resolution also means more power consumption (shorter battery lifetime).
Again, thanks for pointing out the finer technical details. I appreciate your feedback.
How is that D80 working for you?

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