On the Leica forum there is much talk about an interesting discovery made by a forum member Arvid, this intrepid chap as written some code that takes the images shot in the JPGFine+RAW setting and converts them into 14bit uncompressed DNG files readable by photo editing software. The JPGFine+RAW option is hidden and needs a sequence of presses on the direction arrows on the M8 to access it.
Arvid's page explains more and provides a download of the software.
The standard M8 DNG is 8 bit compressed and around 10mb in size, the converted 14bit raw file is around 20mb so twice the size.
The camera reverts back to JPG mode if it goes to sleep or is switched off.
I went out and took a few test photos taking advantage of the low December sun and the contrasty light that this provides.
I shot at ISO160 and both he DNG and raw were taken with the same exposure settings.
Back at home I converted the files using Arvid's Mac droplet and the M8raw2DNG software.
I viewed the files in Lr5. My MacBookPro has the Hi-Res screen and I also have an Apple 20" Cinema monitor.
After much looking and zooming in I'm afraid I can't see much difference, at least not where it matters. The raw converted files exhibit a different colour balance, possibly because M8raw2DNG includes the M9 colour profile, in terms of shadow noise I could not see any difference between the raw converted and camera DNG images. Likewise highlights looked the same to me.
One difference is that the raw converted images are 3964 x 2642 compared to the camera DNG 3916 x 2634.
It also took much longer to write the files to my SanDisk Extreme SDHC card, although I was able to buffer a couple of shots.
So my conclusion to this addmittedly unscientific test is that Leica in camera DNG do a really good job at converting the raw files. I will continue to watch with interest developments in this area, I'm sure Arvid will continue to refine this tool, he's obviously a pretty clever fella.
I saw no point in putting the images here as I'd have to reduce them to JPG and any differences would have been lost.