Thanks for all the incredibly detailed responses! It's going to take me awhile to digest all of this. And thank you for kindly providing links, I look forward to referencing them time and time again in the future.
I found another quote that helped me also. It's from Mastering HDR Photography by Michael Freeman.
"To clear up any confusion about dynamic range and bit depth, the number of bits determines the precision of the capture--how many steps the range of brightness can be recorded as. In other words, a 14-bit sensor is more accurate than a 12-bit sensor. Though it might, it does not necessarily capture a wider range, but more detail within the range. The real limit to the range of a sensor is the amount of noise in the shadows."
I guess my earlier quote from the other book says "potential dynamic range" not that bit depth = dynamic range, an oversight of mine to assume it did.
Although my mind isn't completely wrapped around the info you all possess, and are taking sides on, I feel there is much to learn from both sides. Keeping the original raw files certainly makes the most sense as they are smaller and preserve the original data. My question was provoked not as a study of dynamic range in tiff vs raw, but in recovery. By deliberately pushing EV either + or - so that your image looks bad (the furthest PS or LR allows is -4 or +4), after saving as a tiff or raw file could you recover it to the original look. My thought at first was maybe you could. This all depends on how much DR can be preserved in these files and if the range is preserved equally on both sides to determine if this will work with both +4 and -4 effected images.
After looking at my test I realize the Exposure tool within PS is different than Exposure in Lightroom. Though opening the +4EV DNG in ACR I can easily move the exposure slider back down and get my original image, if I were to open it in Photoshop without touching it in ACR and use the Exposure tool in Photoshop it appears the same way the Tiff looks when I try to recover using the Exposure tool in Photoshop. So I guess my test is flawed.
There is a reason why I'm experimenting with this. I create time lapses. In situation such as sunsets it's very hard to photograph because you have to adjust your exposure every few minutes for the changing light conditions. This makes terrible exposure jumps when you create a image sequence, unusable. I've found using Lightroom you can "match total exposures" to smooth out the jumps. But in the case of a sunset as it gets darker and you've compensated by increasing shutter speed, after you "match total" exposures LR will apply drastic -EV to compensate for the increased shutter speed. I was hoping by saving as a 16bit Tiff or DNG that info would be preserved so that I could use After Effects to create a sequence and apply a gradual exposure increase throughout.
What do you guys think?