Wow, that does sound like the long way around but if it works for you great.
Just be aware that dts (on cd's and DVDs, vs. DTS-HD MA) is lossy so you are decoding a lossy compression scheme (DTS) and then re-encoding with another lossy compression scheme (AC3). Again, if it sounds good to you then fine.
I have an Apple TV rev 2. I'm surprised I don't have a guide posted here. Perhaps I started and didn't finish
Anyway, Welcome aboard!
Stereo to surround info:
viewforum.php?f=8Supporting info and AudioMuxer:
viewforum.php?f=7Cheers,
Z