Reply #113: You are getting that wrong a bit...nerve cells, in fact, do fire all or nothing...

[yawnmaster]

They are digital, even the nerve cells in the ear - that is the action potential.
What is analog, to a point, is the triggering mechanism of the cell - the graded potential you mention above.

The analogy is a gun...
Each gun may have a different pull pressure required for the trigger (analog), but once triggered they all fire. The pull pressure of the trigger has no affect on the speed of the bullet.

The ear is loaded with nerves "each" can be triggered by different frequencies.
It is not completely continuous across the audio spectrum since there are a finite number of nerves, but it is perceived as being continuous, as the brain does wonderful things...
even with its all or nothing firing of neurons.