HTSP is the protocol that the Kodi plugin uses to talk to Tvheadend. If you are using the "Pass" profile, Tvheadend does not additional processing, but merely sends the stream to Kodi exactly as it receives it.
What is "best" is subjective and varies based upon your setup. If your Tvheadend machine can do hardware transcoding, then perhaps you want to transcode. If you haven't purchased the MPEG2 license for the RPi, perhaps you want to transcode. Profiles are subjective, and how they're best used is dependent upon your particular setup.