Ok, I'll attempt english, but it might turn out to be techno-babble, who knows.
The true SPDIF standard is -0.5volts for a logic 0 and +0.5volts for a logic 1. Most gear doesn't really follow the SPDIF standard exactly (probably since the spdif standard is assinine). So A/D gear will put out 0volts for a logic 0, and 2-5 volts for a logic 1.
Semiconductor chips (ICs) in general require "TTL" logic levels--transistor-to-transistor logic. Theoretically, TTL levels are 0volts for a logic 0 and 5volts for a logic 1. In practice, most ICs require somewhere 3.2 and 3.6 volts to recognize a signal as being high enough to be called a logic 1 (this is the 3.3volts Doug is talking about).
The trouble is the voltage level of the digital signal coming over the coax from the A/D converter might be high enough to meet or exceed the spdif standard, but it is not high enough to meet the TTL standard required by the ICs onboard the JB3. This is the case, I believe, with my V3. Apparently according to Doug, the Sony SBM1 puts out a TTL level signal on its 7-pin out (meaning, more than ~3.3volts for a logic 1, meaning alternatively that Sony does not conform to the spdif--Sony/Philips Digital InterFace--since they know the spdif standard is moronic).
So if you're using a SBM1, you could replace the optical jack with a 1/8" jack used for a coax input. Tie this right to where the old optical went on the board (well, with the de-coupling capacitor Doug notes on the hot lead) and all would work fine. But then when you upgrade from the SBM1 to a V3, it would not work since the V3 doesn't meet TTL levels.
You can get buffering chips that will take lower than TTL levels and boost them to TTL levels. A good coax-to-optical converter design for example would do this. I imagine this is what is done in say a Hosa coax>optical converter. The crappy infamous "greybox" converter (which I bought and have lying around somewhere) does not use these buffering chips. Which is why the greybox converter does not work with the V3.
Doug also says that rather that trying to install the buffering chips onboard the JB3 so it can take any coax output from an A/D converter, it might be easier to modify your A/D converter to be sure it sends out TTL level signals over its coax out. The trouble with this approach is that if you change outboard A/D converters, your mod'd JB3 may stop taking the coax signal.
Bottom line to all this is that it just won't be too easy since the most flexible way will be to do all the changes on the JB3, but this will require adding circuitry to an existing surface-mount board. I've thought numerous times of trying to attack it, but I don't want to mess with my JB3 and I haven't gotten motivated enough to buy a second JB3 that I can f*ck with and probably destroy.
-Todd