Distribution is distribution is distribution. If you tell the trustee, "I'd like that in Chickens," it's still that distributed Value. The nature of the distribution doesn't change that fact.

For this: "was that a direct rollover of in-kind assets is possible, without converting them to cash."

Maybe. It depends on the situation.

This is why you would have a Self-Directed IRA. The only thing I've ever had to convert to cash, when rolling SEP, SIMPLE IRA, and other IRA accounts into Self-Directed Traditional IRA, was some institutional mutual fund shares that were not to be held outside of their own "advisors." That holding gets Sold and the funds are then rolled over.

"An asset can be converted(or recharacterized) back to pre-tax cash and then become a distribution."

It can be Sold and the proceeds become part of the IRA available for distribution or to buy something else. It's not recharacterized or converted. What happens first will be within the IRA; it's just an Account. Conversion and recharacterization are no different than any other IRA. The investment type is different. You hold cash, mutual funds, shares of stock, real estate, gold, whatever qualifies. Not being liquid doesn't mean you can't move them to another trustee.