I am finally at peace with this.
Did do a couple of HB,s from the original disc and setting the AC3 track as DTS and pass through.
The result and the first time I have seen it, was the AVR played through ATV2 fine, but the AVR indicator lights indicated Dolby, Digital and under that prologic II.. think the LCPM light was on also and the HDMI light. I recall HB stating that ATV wont pass true DTS but it rearranges it to a form of PL II, which is what the indicators on the AVR show. HB recommended to just use the 5.1 AC3 track.
When I use HB to set the AC3 track to 5.1, english, ffmpeg, my preference, pass thru sounds flat to me, and a downmix to 6 channel discrete at 448 the AVR reports Dolby Digital and of course HDMI and if I try to cycle the AVR through the modes, it wont let me which is fine. So, It appears I finally have something a wee bit cusomized and sounding very good, maybe adequate +.. LOL NO not jail broken and I load them on the iPAD1 and air play it to the ATV2.