Dolby Digital Audo Setting -- Need a setting that just works!

Can anyone provide info about the dolby digital (DD) AUTO setting - and what it is supposed to accomplish?
Auto (the default) limits output to stereo via HDMI, and 2 channel PCM via the optical output. That just doesn't seem like much of an "automatic" setting to me.
When set ON - content encoded with DD does get properly sent out the optical cable but at the expense of the stereo feed to the HDMI port. And, this can be really confusing to a casual or novice user, especially if the user had been watching content with just the TV speakers active. If a new movie with DD encoding starts, the user gets no audio at all. And there are times when audio output from the TV is fine, and the power from the audio receiver is not needed.
I believe Apple should enable the stereo feed via HDMI - AND - output a digital feed via the optical cable. It doesn't matter if this is the ON or the AUTO setting, but one of these should "just work".
I'm really not looking forward to having to toggle this setting depending on the content I'm viewing.
I'd appreciate any helpful info - words of wisdom - even blank stares!
Thanks in advance
JD

Ok I think I understand how it works now. Auto won't send 5.1 if one of the components connected (like a TV) does not support 5.1. So for instance if you connect your HDTV with HDMI and use optical to a 5.1 receiver, you'll get stereo on both because the TV does not support 5.1. Auto on the Apple TV basically uses the lowest common denominator that allows both to output the same thing at the same time.
However, if you switch it to On in that setup, only the optical cable will get sound and it will be in 5.1 because it's the only output connected to a 5.1 capable device, your receiver.
However, the optimal connection method is to just connect your Apple TV with HDMI directly to a receiver with HDMI inputs. That way, Auto allows the 5.1 sound over the HDMI cable to your receiver and the receiver sends the video to the TV over its HDMI output cable.

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