The Macworld Blog says "If iTunes is playing back a digital multichannel file format like AC3 (Dolby Digital) or DTS, those bitstreams are wrapped in Apple's compression and encryption, and then decoded at the other end. In those cases, AirPort Express would end up streaming the raw AC3 or DTS stream via an optical cable to your home theater receiver for decoding."
Where would iTunes obtain such audio, and how? (Would iTunes also downconvert said audio to Apple Lossless for listening via the analog output of Airport Express?)
Something here smells an awful lot like either a. higher quality of songs to be sold at iTMS soon (probably for more money) and/or b. video(s) of some type to be sold at iTMS soon and/or c. iTunes incorporates DVD playback (?)
I would say that the audio would be coming from the DVD Player, except for this:
In the comments to the first Macworld blog post about Airport Express, user 'kwimalar' asked 'Does this mean that Powerbook users will be able to get
surround sound for their music and DVDs, without having
to use an adapter like the Sonica?' and Dennis Sellers (one of the editors) replied that 'kwimalar, this is for iTunes only. Not for DVD Player or any other app.'
So have I proven anything interesting? Obviously, iTunes will somehow be obtaining DD/DTS audio to play back via APEX - and if you look at the second Macworld blog post about APEX, in context, it appears that the information in the post is primarily credited to the post author's conversation with Greg Joswiak.
So Greg Joswiak is indicating high-quality audio in iTunes, at least at some point. The only other way I could think of this audio being available (besides my points a, b, and c above (regarding songs/videos to be sold, or DVD playback) would possibly be movie trailers offering DD/DTS surround sound via iTunes, but that wouldn't make much sense in conjunction with APEX unless video was also going to be sent to the living room; unless Apple merely intends the feature for those who have surround speakers in the computer room. Nonetheless, it would seem strange to me to offer that for movie trailers but not for actual DVDs being played back. Maybe SACD support in iTunes? That would seem to be the only other type of quality audio I could think of.
BTW, how long until someone offers a free/cheap utility that hacks the Airport Express to be usable as an audio output for any application (not just iTunes)? Of course it could be done right now with Rogue Amoeba's Nicecast (just hijack application of choice, turn around into MP3 stream, play MP3 stream in iTunes, and let iTunes send it to APEX). But I bet someone will offer a utility for those who would like to let Windows Media or Real Player audio be sent to another room (for example) or any other app floating around.
(P.S. For those who want Ogg support, I'd say that the new Airport Express probably *does* support Ogg, provided you have the proper QuickTime plugin installed. I get the impression that virtually anything you can listen to using iTunes, you can also listen to using this unit.)