Yes, that is the exact $30 extractor that I was looking at.
After some further research, I believe that you are incorrect when you say that the "Apple TV simply passes on what it receives in the stream from the source". And that is a good thing.
The extractor has a physical switch labeled "Audio EDID" with three positions: "Pass", "2CH", and "5.1CH". EDID is the code that the display end of an HDMI connection sends back to the source end to tell the source what its capabilities are. So if the ATV4 is connected to one of these boxes with its EDID switch set to "5.1CH", the ATV4 should "downshift" the audio in the HDMI output to 5.1 even if the source is 7.1.
So I believe that this is a viable solution regardless of the audio format of the source material.
I still would like to know why the OP dismissed this solution out of hand. Does he think it won't work, or is he just irked at having to spend an additional $30? If the audio output is used by only a small percentage of ATV owners then I understand why Apple would want to eliminate it to reduce the cost for everyone else. But there's a big difference between having to spend $30 for one of these extractor boxes and having to throw out my (good, but old) receiver and buy a new one. This is acceptable to me.