I didn't catch the Toslink - good eye, Jason. I found the manual their site and am reading through it. It appears to support playlists.
In the appendix, there's a note under the VIDEO section (pg 71 of the PDF, labeled as 68 in the manual) that states: "2. Audio sample rate must be: 8000, 11025, 12000, 16000, 22050, 24000, 32000, 44100, 48000 "
I can't tell if that applies to FLAC audio or not. Please let us know about 24/96 support! If that works and now that I see the optical out, I'd get one of these over an HTPC - a little more plug-and-play and I doubt I could come close to building something for $120.