Your final sentence really makes the problem clear. If turning on remote speakers automatically turns off the ATV speakers it's not really clear what Apple thinks the point of this option is. Surely we often wish to turn on one or more sets of remote speakers in addition to the ATV so that we can spread the music throughout the house. And as you note, the original AppleTV could do this easily and gracefully. I too had really thought that they had really fix this - but it turns out they they still are forcing us to use the Remote app for playing through muli-speakers. How disapp[ointing.
I have same problem. In past I have always played itunes library music on multiple sets of airtunes speakers around the house. Now my new Apple TV device can only play to one set at a time and has locked out other devices from using the airport express modules entirely. Good job Apple, way to test your software before subjecting your users to fatal flaws.
I have the very same setup as the original poster.
Until the iOS 7 update streaming from content from my AppleTV 1st gen to my AppleTV 3rd gen was not a problem. Note, it did not run smoothly with other simultaneous activity on my wireless network
After the iOS 7 was installed op my iPhone and iPad Mini this no longer works at all, which is a step back.
Quite frankly, given the cost of apple TV movie rental, multiple speaker music streaming was the primary reason I purchased an apple TV 1st gen. Itunes and an apple TV replaced the need for an expensive all home stereo set up. It was brilliant.
This change makes takes us dramatically backwards.
I miss Steve Jobs.