QUOTE(DualIP @ May 19 2008, 14:39)

-Don't dither, just feed the higher resolution audio into the codec.
(I do that when using oggenc)
-What do your spectographs tell us? It seems to me you're using a mp3 decoder (yeah DEcoder) which doesn't have noise a shaping output. This way advantages of the noise shaped codec input will obviously be lost
I'm using the Fraunhofer mp3 decoder built into Audition 3.0. I think that's representative of a good-quality commercial mp3 implementation. MP3 decoders may use noise-shaping to alter the quantisation error introduced in their coding process, but this is a different thing to that used in word-length-reduction dither. You'll have to explain how noise-shaping in the decoding stage would retain the noise shape introduced before compression, rather than simply disrupting it, like any signal manipulation would.
I can't see any point at all in feeding a 24/96 signal through a lossy compressor. If you need to use
lossy compression to reduce the size of your files, then 16/44.1 must obviously be the first step, I think the issue of the audibility of high sample-rates and word-lengths has already been done to death on this forum. If you want to retain 24/96 for whatever reason then you should be using lossless compression and this discussion has nothing to do with that. A correctly-dithered reduction to 16bits is a highly effective form of lossy audio compression.
Dithering down to 16bits is essential for mp3, at least. I discovered that LAME will accept 32bit data in type1 format (4byte PCM as opposed to the default type 3 floating-point format). I fed this into Lame at -V0 and the result wasn't pretty:

Blatant truncation errors
Ogg fares quite a bit better, and obviously has been designed to accept high word-lengths. (All ogg encoding using oggenc2 v2.85 libVorbis 1.2.0, decoding using the 03/04/2008 libVorbis 1.2.0 CEP/Audition filter from RareWares.)
Original 32bit signal in green, Ogg VBR Q10 encode of the 32bit file in blue:

Ogg's behaviour is very different to mp3's, which makes it quite hard to compare as Ogg simply seems to disregard low-level noise.
This is a comparison of the 16bit signal (0.6bits of triangular dither, type 'D' noise-shaping in Audition, the same as in the example in my first post) in green with the Ogg VBR Q10 encode in blue. The band from 3.5-13kHz intermittently lifts up as shown here, but for much of the file is sunk below the bottom of the graph.

Here is a comparison of the 16bit signal dithered without noise-shaping (green) and the result of a VBR -q10 encode (blue). As before, the high-frequencies pulse from below the bottom of the graph to roughly the position show.

The lack of any consistent noise-floor in the Ogg encodings makes it difficult to see if noise-shaping has made any difference apart from the obvious HF bump found in the encode of the noise-shaped file.
I've also tested AAC encoding using Nero's AAC encoder (v 1.1.34.2, August 2007). The results were almost identical to those for mp3s, except that AAC at its higher quality levels was able to reproduce the high-frequencies more faithfully than lame -V0.
I noticed something very strange with regard to file-sizes, though, which makes me think that comparing file-sizes on an artificial test-tone like this is probably a bad idea.
CODE
No noise-shaping:
VBR Q level Size
0.5 66kB
0.75 72kB
1.0 72kB
Noise-shaping:
VBR Q level Size
0.5 52kB
0.75 27kB
1.0 27kB
I.e. the size of the file went
down as the VBR quality was raised, but only on the noise-shaped file. I checked this twice and suspect it may be the result of optimisations in the encoding algorithm. File-size comparisons are probably only relevant on examples of real music, which should be the next step I suppose.
[Edit]
Ok, I did some further size tests with real music and confirmed my suspicions.
In the interests of doing a test that can be repeated by anyone, I used the 24/96 file of '999,999' from 'The Slip' which is freely available from nin.com. This was converted in Audition into two different files: one @ 16bits/48kHz dithered with Audition Type 'D' noise-shaping and one @ 16bits/48kHz dithered with no noise-shaping (the conversion to 48kHz was required as the free Nero encoder can't handle high sample-rates). These two wav files were then encoded in mp3, aac and ogg, each using 3 different levels of VBR quality.
Results are:
CODE
Quality Size
MP3 (Lame) No Noise-shaping Type 'D' Noise-shaping
V5 1248 1239
V2 1890 1867
V0 2327 2301
AAC (Nero)
0.5 2088 2088
0.75 3125 3308
1 3984 4177
Vorbis (Oggenc2)
5 1440 1441
7 1914 1918
10 4105 4125
Clearly the size differences I was seeing earlier on the test-tone are the results of artifacts related to encoder optimisations. Lame shows a very slight improvement in efficiency with noise-shaping (on the order of 1%). AAC shows a notable 5% drop in efficiency with noise-shaping at the higher VBR levels, which may be related to the greater fidelity with which it encodes the high-frequency shaped-noise. Ogg shows almost no difference between the two files, which may be related to the way it handles low-level signals.
I think this is probably enough to rule out VBR coding efficiency as a means of deciding whether to use noise-shaping, which makes me revert back to my first conclusion: that noise-shaping is worthless (and can actually
harm your signal) on signals that are going to be lossily compressed.
Given the big song-and-dance that many audio equipment/plug-in makers produce about the quality of their dither/noise-shaping algorithms, this is quite an important issue. Right now I'm tending to the belief that if your listeners will be hearing your audio as a lossy compressed file (which applies to the vast majority) you're better-off just using flat triangular dither and should only use noise-shaping for CDs or if you can distribute a losslessly-compressed file.
You might notice I haven't mentioned any subjective tests here - that's because right now I don't have access to an environment with a sufficiently low level of ambient noise and you can't properly compare dither results by just cranking up the gain on your amp.
Any comments?
(Apart from 'don't dither' - that just isn't an option

)