I use the optical out on the airport express and it works fine with with a digital receiver or a set of powered speakers. Never had any pops or anything, but of course I am sending signal wirelessly so it's a different situation than yours.
I think it was aberg that tested the optical in on a powerbook (?) and confirmed that it is bit perfect.
Cruise on over to Team Mac Geeks, lots of helpful info over there. +T for switching over!