I am capturing in Canon RAW, so from what I understand the camera takes the 14bit data and converts it to 16 bit for the CR2 format. Of course, I may be wildly incorrect here which would be no surprise to me.
No, the camera does not convert 14-bit data to 16-bit data. The RAW format is a monochrome Color Filter Array (CFA) image. The intensity values are 14-bit data, accordingly the range is from 0 to 16383.
When I use the readout tool on the cursor in PI, my max 16 bit values are very near the top, or as expressed in scientific notation in the 9.99 e-01 range. Are we talking about the same things here?
Your detail of the statistics process shows that the CFA image was already debayered by PixInsight, i.e. the CFA image was converted to an RGB image. So you are not reading out the original intensities of the RAW image.
If you want to read out the original intensities of the RAW image, execute the following steps in PixInsight:
Call ‘Format Explorer’ and double-click “RAW”, in RAW Format Preferences choose ‘Pure Raw’ and confirm with ‘OK’. Now open a CR2 file. You will see a monochrome CFA image which contains the “raw” intensities now. Call image statistics and set it to 16-bit [0,65535].
It is important to understand the difference between CFA and RGB images. In case of doubt search for “Bayer Filter” in the internet.
Please note that astrophotos taken with One Shot Color (OSC) cameras shall be calibrated (and, if applicable, cosmetic correction shall be applied) as monochrome CFA images. The debayer process (conversion to RGB image) shall be applied afterwards, to be specific: directly before registering the images. Then the image integration is performed.