[Paul Alvarez]

Although the Apple TV is plumbed with HDMI and optical audio output, it is not able to process Dolby 5.1 (at least that is what I understand). Seems odd to me that videos or ripped DVD's can't be heard in their original audio for the full effect.

[slpdLoad]

I think it's more a problem of iTunes not supporting 5.1, since the Apple TV's hardware should be completely capable of passing through 5.1. You could always just install OS X on the Apple TV

[Recontech]

Yeah, I think its a huge let down personally. While I'm looking forward to installing OS X on an AppleTV, I shouldn't have to. I'm really hoping a very soon update from Apple just adds 5.1. Why even have optical audio out for just stereo?

In fact, the more I think about it the more its a deal breaker for me. Straight out of the box, if I want to watch a movie with it, it should be the movie's full digital audio, not simply two channels.

So for those with an AppleTV, how do you stream movies to it? Let's say I start with a DVD of a movie, do I just rip it and have to convert to H.264 or something?