Is it possible for this option, with reference to digital television or DVD playback, to actually cause a worse image quality. I've been wrestling with digital bluring on a new HDTV I bought, and it seems to get better when DNR is turned off? I hope this isn't too off topic.
When it comes down to it with these fancy new devices with all the presets and filters and such, what matters most is what the user prefers. If you think it looks better with DNR off, then switch it off!
I wouldn't be surprised if it did take some detail away from the picture. It's like scanning in a grainy photo and applying a soft filter in Photoshop for example. It is no longer grainy, but now it's a little blury. The best option for you, is which ever appeals to you most