Followings are my observations in audio streaming with Apple TV 3 and Airport Express through AirPlay protocol:
-- Apple TV 3 come with only digital audio outputs through HDMI and optical SPDIF outputs. If you connect optical link from the optical output to optical input of any DAC and HDMI cable from the HDMI output to HDMI input on TV set, audio output will be transmitted through both digital outputs. Thus is is not necessary to turn on TV set unless visual feedback is required. There is no audio analog line output for Apple TV 3.
-- AirportExpress come with single combo mini jack (digital + analog) for audio output regardless of old/new models. You can connect either digital optical link (with Mini/Toslink adaptor) to digital input of DAC or analog line cable (inferior) to analog line input of amplifier. When analog line is used, digital-to-analog conversion is done by DAC built into AirportExpress for which do not expect quality is as good as most external DAC models. What do you expect from a single-chip DAC implementation vs standalone DAC models cost few thousand dollars ? Moreover analog line is susceptible to interference more than digital line.
So the decision to use Apple TV or AirportExpress, analog or digital transmission for audio streaming depends on whether you need WiFi base station features of AirportExpress to establish wireless network and quality of your audio system to justify all-digital audio transmission. Followings are what I use in audio streaming from iMac/iPad mini /iPhone 5 to audio system in living room. Quality of audio output is comparable with Sonos Zone Player as audio source.
Apple AirPort Extreme wireless base station (802.11n, 5GHz)
Apple TV 3 (firmware 5.1.1, Xtreme HD Toslink optical cable)
Antelope Audio Zodiac DAC
Bel Canto power amplifier
Bowers & Wilkins 683 speakers
Yamaha YST-SW215 subwoofer