Audio cable meaning HDMI right? Yes, that will work, but I'm trying to accomplish playing this music on Zone2 which will only play networked music and analog sources. If its through HDMI then it won't play.
For both the Express and the Apple TV support iTunes streaming via an optical digital audio port. More specifically the Express' audio port supports both optical digital and analog audio output. The Apple TV does not have analog but does support both optical digital and HDMI.
I guess what I'm trying to figure out is if there is a way to stream iTunes through the network connection somehow on this receiver.
If you mean streaming iTunes directly to the Onkyo via wireless, then sorry but no. This is where having AirPlay capability would have solved the problem. Since the Onkyo does not, you will need either the Express or Apple TV to provide that capability.
What about hooking my Macbook up to the USB port...maybe that'll work?
No, but connecting an audio cable between them should.