48kHz LPCM is a lossless representation of a FLAC file.
The FLAC format can not be transmitted as-is over the optical cable as the S/PDIF standard does not mandate it's support. Also, the TOSLink standard is just a single fiber resulting in one-way transmission. Unlike with two-way communication standards such as HDMI, the media player can not get any information for the receiver as to it's capabilities or verify it has changed modes correctly. It is easiest to confirm compatibility across the largest number of audio receivers by fixing the sample rate at the S/PDIF default of 48kHz. Trying to support the optional S/PDIF sample rates of 44.1 kHz and 32 kHz adds complexity while not having a noticeable improvement.
As to the question of transcoding, going from FLAC lossless compression to LPCM raw uncompressed format is transcoding but still remains lossless. Going from 44.1kHz to 48kHz is considered up-sampling which is a modification but does not produce anything close to the undesirable effects of digital audio compression artifacts.
If you have a computer with a premium sound card that includes a TOSLink audio fiber connection as an option, I recommend trying to see if you can get the sound card to transmit to the receiver at the 44.1kHz sample rate. I would then try playing the same FLAC file at 44.1kHz PCM and see if you can hear a difference between sample rates. Preferably try having someone else choose the sample rate randomly without telling you ahead of time so you are doing a blind taste test. I personally can't hear the difference with up-sampling but I can hear the impact lossy compression formats like 128kbps MP3 has on several audio samples.
