i'm sure it's possible, what you have to do to make it work is another thing, i haven't popped mine open because i have to get the right size mini-torx bit, i thought it was held together with allen screws but it's torx #5 or some BS...there are good photos of the innards on the rockbox site that show the opto reciever and transmitter parts, but i still haven't found the actual part number of those, there are some numbers printed on them but i think it's an abbreviated part# or a date code or something....
having the actual part number etc. isn't really necessary, the pad on the board for the optical signal should be easy enough to find, all you have to do is jack the coax signal onto that...for the input (only) i was thinking you might be able to replace it with a standard minijack and connect the tip of the analog signal with the tip of the digital signal - the codec ignores the one that isn't selected, so the analog input going to the digital input probably wont' affect things too much, but the digital input going to the analog input may be weird, depending on wether or not you feed it 5v s/pdif or 0.75v s/pdif. possible tho, i'd have to rig it up and see if there were any negative interactions. i don't think it's the same with the output, if the digi out is still on and you feed that to the analog output it's bad news....so in only is feasible. the problem is the i/o though, if you break all of the i/o out that goes into the 2 1/8" jacks you'd need 6 RCAs...2x input, 2x output, digi in and out...clever soultion by the iriver folks, i just hate optical digital signal transmission....