A 20D also seems to have its lowest Read Noise at ISO 1600, slightly lower compared to other ISO settings.
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Does this mean that by applying that extra amplification (to "ISO 1600") early, right at the photo-sites, the relative impact of subsequent noise in the read-out and A/D conversion is minimized?
Naively, this makes sense, and suggests something like Samir's strategy, or at least my understanding of it, which is as follows.
1) amplify a lot and early, say to "ISO 1600", to minimize the effect of noise introduced later in the process (read-out, A/D).
2) use an A/D converter than can handle the resulting high maximum signal strengths, for example in situations where one is using "exposure index ISO 100", and thus amplifying to a level of four stops of "over-exposure". That is, add four bits or so of highlight headroom to the A/D convertor. So yes, go to 16 bits A/D or even more, in that direction.
Then selected ISO speed affects shutter speed/aperture choice in AE modes, but goes into the raw file as a mere suggestion for default raw conversion, like WB, sharpening, and such. With manual shutter speed and aperture setting, the light meter reading could be used to record a "suggested" ISO speed in the raw file.
My question is how large a signal-to-noise ratio an A/D convertor for a portable camera can have these days, or in the foreseeable future. That limits its useful bit range, regardless of what the spec. sheets say. No point the A/D being able to handle very high input levels if the noise added by the A/D convertor is much more that 1/65536=1/2^16 of that maximum signal, because then the least significant of those 16 bits are all A/D noise, no signal, and "16-bit" becomes purely a paper spec.
Aside: with current SLR sensors, the only possible benefit of 16 is covering up to four stops of exposure level error, which is related to what I (and Samir?) propose as a deliberate strategy. With correct exposure, abut 12 bits is enough to record the S/N ratio of any current SLR sensor itself, and trends at the high end (Kodak and Dalsa) seem to be holding the line or even dropping S/N ratio for the sake of increased pixel count. (Leaving the options of binning or down-sampling when the user prefers extremes of high DR at less high resolution.)