Yes to the audiophile PCM should offer more detail than Dolby audio but as you have said at the expense of video quality/space.
Most video you are going to shoot isn't going to require audiophile audio quality and compressed audio offered by Dolby or MPEG audio is going to be fine.
The difficulty comes in authoring as per DVD spec. When the DVD video specs were originally drwan up PAL players had to support a minimum of PCM & MPEG audio (MPEG audio having similar compression rate to Dolby) while NTSC players had to support a minimum of PCM & Dolby stereo. There wasn't much take up with the MPEG decoders so the specs were revised in that PAL players also had to support a minimum including Dolby stereo.
For maximum compatability you should use Dolby (compressed) or PCM (uncompressed) audio. In PAL land though you can get away with MPEG a lot of the time.
TMPGEnc does allow you to ouput PCM or MPEG audio but not Dolby. As I said official Dolby AC3 encoders have an expensive licence attached (A Dolby standalone software 5.1 encoder can cost about $1000). Most Dolby software encoders will come as part of the authoring software (Programs like Sonic's DVDit PE & ReelDVD have built in Dolby stereo encoders but this pushses the cost of the programs up). I myself have a Dolby 5.1 mixing & encoding pacakge as part of my editing software (Sonic Foundry's Vegas)
Cheaper authoring programs tend not to offer Dolby but will allow you to output MPEG audio.
In short if you can you are best using compressed audio & saving bitrate for video.
Of course you could always get someone with a Dolby encoder to encode your PCM to Dolby for you if your authoring package will accept dolby but doesn't have an encoder included.