I'm pretty sure MC will send a file URL to Whitebear, which then just forwards it to LMS which plays the file natively.
Yes this is correct. For audio types that LMS can play natively, Whitebear does indeed pass on the same url to LMS. Here Whitebear is simply acting as a middle man translator that obeys control action commands in "UPnP speak" from UPnP Control Points on one side, and forwards corresponding commands in "LMS speak" to LMS on the other side.
For certain file formats, Whitebear will proxy the stream as FLAC.
Indeed. LMS and Squeeze players cannot play PCM streams (even though they do use PCM internally). But PCM is the default "must support" audio format in the UPnP / DLNA world. So when a Control Point commands Whitebear to play a PCM stream, it does
not just pass that url to LMS; instead it passes a proxy url to itself. And when LMS pulls from the proxy url, Whitebear pulls the PCM from the original url, transcodes it, and passes the resulting FLAC stream to LMS.
So I don't believe Dirac will be involved, but I'm not an expert here.
I have absolutely no idea what Dirac is, but/so I can definitely say it is not involved in any way. If Dirac is a black box that modifies whatever stream that MC is serving, then you can assume that whatever it may be doing will be transparently passed on to the player.