Audio switching using optical connection

I am directly connecting to my 2005-era Denon receiver (AV3805, no HDMI) using an optical connection. With the ATV2 "Dolby Digital" setting to 'On', I can get Dolby Digital (5.1) from movies on iTunes, but I'm wondering if the Denon unit is capable of automatically detecting/switching between *Dolby Digital 5.1* and *two-channel stereo*, for example, if I wanted to also stream music. Am I missing a setting on the ATV2 that is preventing the receiver from doing this? Setting the ATV2 to 'Auto' does not seem to force the Denon unit to decide on its own. Thoughts from others with similar receiver set-ups would be appreciated.

Can you not configure the amp's input to automatically detect the feed?
I set the input to 'Auto' on my older Yamaha DSP and it switches automatically.
I don't think the optical feed itself can tell the amp what to do - it just has to detect what's coming in and respond appropriately.
For 2 channel audio AppleTV should be outputting linear PCM, but I believe the newer one adulterates it by up-converting to 16 bit 48kHz, whereas the older unit didn't fiddle with the sample rate.
I'm not sure either if the Dolby Digital setting in the AppleTV menus only affects HDMI output, whereas a surround track just gets passed though on optical if it exists, if not a 2 channel 48kHz 16bit bitstream is sent.

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