Earlier digital masters were undoubtedly limited to 16 bits words, but due to limitations of the hardware used, few if any actually achieved the full 16 bits of information. Just rip any number of 80's CDs and normalize them to 100% and you will likely note that there is quite a bit of gain necessary to bring them up to 0dBFS. The further you are from 0dBFS, the lower the effective resolution is.

Another note on analog sources. The A/D conversion process degrades the sound of the analog source. Anything that can be done to lessen this effect is beneficial. HDCD encoded CDs, with their higher resolution, will more faithfully reproduce the original analog master than will a standard CD.

Stu