I'm afraid that's just not true. Are you saying that if my source is utilizing bit 22 on a 24 bit source, then my 16bit would be maxed at 16???
I'm not quite sure I understand your question; "16th bit maxed at 16" makes no sense to me. A couple of things to consider:
First, as has already been mentioned by at least a couple of others here, the actual dynamic range from peak to noise of the analog signal being converted is going to be - if you're very lucky, if you have A-list gear, and if you can game the gain structure well - maybe 65dB max. If you set the input gain on your converter (just for illustration) so the signal peaks at 0dBFS, the analog noise floor is going to be coming in at -65dBFS. This means that any bits of "resolution" below the 11th or 12 bit are meaningless because they will be swamped by the analog noise almost as if the analog noise is acting as it's own kind of analog "dither" (in a manner of speaking.)
The second consideration to help illustrate the first is to look at that situation in reverse, set the converter gain so the analog noise floor is brought down to the digital noise floor, down at the 23rd or 24th bit, giving you the maximum potential range and "resolution". Nothing changes except the relative digital volume, all you're doing is shifting the signal representation down so the signal is now peaking at some -73dBFS instead of 0dBFS. There is no increase in "resolution" by shifting the bits down and using all 24, because there is no change other than a linear changes in the overall volume of everything.
Third: the above two points are equally as true with 16 bit as they are with 24 bit. The only difference is the point at which the digital noise floor comes in.
Fourth: "resolution" and "accuracy" do not always equate. Adding decimal places to a decimal value or bits of "resolution" to a binary value only matters if the numbers being filled into those extra placeholders are actually accurate. For example, take a hypothetical measured value for pi of, say, 3.14159. Simply adding four more decimal places to it and making it 3.141590000 does not increase it's accuracy. Nor does it increase it's accuracy if the measurement value itself is not accurate at that resolution. A measured value of 3.141597345 is NOT more accurate than 3.14159, and in fact is *less* accurate as compared to the real value of pi, because the measurement itself loses accuracy at finer values.
Imagine for a minute a world where we can somehow pump an imaginary signal into the converter unburdened and unencumbered by upstream signal chain noise, so we do indeed have a wide dynamic range signal rivaling that of the 24-bit digital canvas. It's most likely that the actual in-studio sound levels are going to be, again for illustration, peaking at around 120dB SPL. This can be covered in 20 bits, with the last four bits being increased "resolution" of the value of the 20th bit. This means at the 24th bit, we are representing a value of 1/16th of a decibel.
Leaving aside that this is several times less less than what the average human ear can ever hear, and leaving aside the fact that the live room in which the recording is made is probably not an anechoic chamber and will have an amount of it's own self-noise that will be well abouve 1/16th dB, let's focus on the converter itself. We would need to make several assumptions regarding the "resolution" quality of that converter in order to make that 24th bit significant relevant; it would require an accuracy of twice that - 1/32nd of a decibel - in both the analog preamp circuitry of the converter and in the conversion value itself.
With a more realistic analog dynamic range of 65dB, even if we ignored the analog noise, "utilizing" all 24 bits would mean a level of "resolution" at the 24th bit of some 0.00003rd of a decibel, requiring an accuracy of twice that in the converter itself.
Assuming three one hundred thousandths of a decibel could even be heard by even the finest of ears (they can't), and assuming that it wouldn't be washed away by the noise floor anyway (it will), we'd need to assume that the converter is going to be accurate on both the analog and digital sides of it's circuitry to within some 1/100,000ths of a decibel or better to make those last bits significant.
G.