There is actually a lot of lossless compression. A very simple example is:
000000000 can be written 9x0. This is essentially what is called run length encoding. Takes 1/3 of the place (in this case).
Lossless encoding means that you can restore every bit in the image.
One issue is that RAW has linear encoding, so it does not use gamma. It is feasible to convert a 12 bit linear image to an 8 bit gamma encoded image without loosing any significant information, because of gamma encoded imaging is more efficient. BUT this would not be pixel for pixel equivalent with the original image. I doubt that any observer would be able to observe a difference. Such a conversion would be virtually lossless. You would not loose information but could not reconstruct the original image. Could you see the difference? Probaly not! Could you measure the difference? Absolutely! OK this may or may not be a diplomatic view.
Regarding proprietary information there is a lot of information embedded in the image, some of that information is standardized like EXIF and IPTC tags. Some tags are vendor specific. One example is the white balance information.
The issue is really that with each camera there is a new "raw" format. Will you be able to read your present "raw" files on your Mac OS X/7 or Windows 2012 computer?
Washed out colors may relate to color space. Lightroom uses ProPhotoRGB as a color space. If your Photoshop is incorrectly set up it may ignore the color profile. I don't thing DNG has anything to do with Color Profiles. It just holds pixel data and information tags.
This is not a question of diplomacy or philosophy, more about how things are. Many people of great experience and knowledge use Lightroom and DNG, like Michael Reichmann (the owner of this site) or Jeff Schewe, they both use Canon and they both know what they are doing. It is quite obvious that some people have issues with Lightroom. I don't know the reason for this. There was a gentleman on the MFDB forum who had a real bad experience.
If you write on this forum for advice you may get good or bad advice but I presume that all information is intended to be helpful.
Am I misreading this as a contradiction?
Philosophically speaking, there is no gain without a loss. You don't lose quality vs. there isn't actually any lossless.
This is actually a great message by you (if I don't misread it). In the digital era we strive for anything lossless. Lossless compression, non-destructive editing.
But it looks like this is all marketing speak.
I just compared my original 40D file, converted by the not very workflow-friendly Canon DPP with the superb workflow software Lightroom's conversion.
Looks like you're taking a hit in conversion quality vs. workflow quality.
And, regarding the superb workflow format DNG, maybe one pays for this with losing, as you said, some "proprietary information".
Proprietary information. This is actually wonderfully said. Isn't anything coming from a camera regarding image quality "proprietary information".
You either have a talent for philosophy or diplomacy, or both.