It is not the card but the codex and the software on the computer. the audio is output through your normal sound card. The card is a mere conduit for the signals. Most of the translation work is done in software but not all. that is why the card is cheap and rather small and you need an decent speed machine.
As to the ATI issue yes you can out put the video and the audio but it is basicly using your "TV" as the display device instead of your monitor. depending on your ATI the audio also can be output to your home stereo either as standard two channel or with fiber or using an rca cable you can deliver
ac3 audio to the home theater. I cannot guarentee how much 5.1 is available in FTA audio, I do know
PBS (amc3) is ac3 audio and I would guess the PBS
HDTV I watch may be full 5.1
Hope this helps,
Maus