Hi Christopher
Sorry here you err completely. see wikipedias definition of optical resolution
http://en.wikipedia.org/wiki/Optical_resolution
which per se is also valid for a digital recording system of that information:
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Measuring optical resolution
A variety of measurement systems are available, and use may depend upon the system being tested.
Typical test charts for Contrast Transfer Function (CTF) consist of repeated bar patterns (see Discussion below). The
limiting resolution is measured by determining the smallest group of bars, both vertically and horizontally, for which the correct number of bars can be seen. By calculating the contrast between the black and white areas at several different frequencies, however, points of the CTF can be determined with the contrast equation.
where
Cmax is the normalized value of the maximum (for example, the voltage or grey value of the white area)
Cmin is the normalized value of the minimum (for example, the voltage or grey value of the black area) When the system can no longer resolve the bars, the black and white areas have the same value, so Contrast = 0. At very low spatial frequencies,
Cmax = 1 and
Cmin = 0 so Modulation = 1. Some modulation may be seen above the limiting resolution; these may be aliased and phase-reversed.
When using other methods, including the interferogram, sinusoid, and the edge in the ISO 12233 target, it is possible to compute the entire MTF curve. The response to the edge is similar to a
step response, and the Fourier Transform of the first difference of the step response yields the MTF.
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So contrast (which is another word for dynamic range if you want to call it like this) is used to measure resolution !
What you mean is visual improvement of dynamic range , but this ALWAYS lowers resolution by using Imaging algorythms that take information from one part of the resolved data set to compute it into another visible information (which as 80MPix do have plenty of reserve - used with the right lenses - may not be visible at first).
these transformations are also lossy - so there is no such thing as a free improvement in one area, most of the time you even cut off information
(see Histogramm after applying Photoshop Gradation). This does not change if you do it in 16 Bit raw processing (C1), it´s only less obvious.
Regards
Stefan