Multichannel audio (ac3, dts etc)

The short answer right now is no.

1) iTunes can play multichannel sound. AAC 5.1 for example but not AC-3.

2) However, no Mac nor the AppleTV can output that sound through the Optical port.

3) The Mac can play surround sound either
a) via VLC (with a file encoded with AC-3) or DVD Player.
or
b) via a device like Griffin's FireWave. This is what I use.

4) The ONLY program that I have successfully found to properly convert AC-3 to AAC 5.1 is an upcoming development version of MediaFork which works superbly allowing me to get Surround sound out of my mac mini

5) My AppleTVs are hooked up only to TVs that don't have surround sound (eg my bedroom)

I was wondering if I have a file with some form of multichannel audio (Dolby Digital 5.1, dts etc) and I import it into iTunes will I be able to get multichannel sound through my living room reciever over the optical output.

No. You would be limited to stereo channels encoded for use wil Dolby Prologic II audio.

In other words can the apple tv pipe the audio stream straight out the optical out, or will I get just stereo or nothing at all.

In my tests, the TV device was not able to "see" files with AC3 or even files with multiple "alternate languages" which previously would sync to my iPod (but, of course, not change languages).

I read in the specs about AAC ip to 160kbps - this seems to me like real poor audio.

But all that is needed for AAC stereo.

Well, Nero can convert AC3 to AAC 5.1 beautifully and very fast... I've tried this both with Recode and a DVD, and the output was playable in Quicktime with 5.1 AAC sound. Now, what I don't know is if Nero's H.264 Main profile (practically, if you choose Cinema-AVC from the list - it means Main Profile, 3.0 or 3.1 maybe) is compatible with Apple TV.. I don't own one yet.. Anyone willing to try it out? :P