More information about ATI's HD 2x00 series audio solution has made its way out on the web. The Chinese language site Hardspell has a whole article about ATI's HD video and it also covers the audio capabilities of the the new cards.
From what we can gather from the information we've seen so far, it seems like ATI is indeed using a proprietairy DVI connector on its cards. The audio signal is transfered via the DVI connector to the HDMI adaptor, but no exact details of how this is done has as yet emerged.
It seems like the HD 2x00 series is limited to 5.1-channel sound with support for AC3, Dolby Digital, DTS and WMA Pro. If these are the only support audio formats, then many high-end HD titles will suffer, as they offer higher quality audio with more channels than ATI can offer.
You're also required to install a separate HDMI audio driver with these cards for the sound to work and under Windows Vista this appears as a Digital Output Device (HDMI).
You can read the full article in simplified Chinese here
