Following a link that was sent to me, https://help.ubuntu.com/community/RadeonHD I was able to download the latest RadeonHD driver version which included the following enhancements from the stock Ubuntu Ibex 8.10 release:
- Xvideo Support ( allows you to actually view movies at 1080 without lag )
- HDMI Audio support ( 2 channel stereo for now, ALSA updates coming soon for AC3/DTS output )
These updates finally allowed me to ditch the analog VGA connection to our Sony Bravia and remove the complexity of my existing audio routing via the receiver.
In order to get audio working, I needed to abandon the Xorg.conf free installation and create simple Xorg.conf file that enabled Audio explicitly:
Identifier "Radeon Driver"
Option "Audio" "on"
Option "HDMI" "all"
To celebrate, I just finished watching the Wall-E blueray on my Mythbuntu machine in all of its digital glory ;)