9/10Many thanks to Oscar, who used to frequent the Atarilabs Forums, but who hasn't been seen in years. Also, big thanks to the Internet Archive for storing the schematic you see below, long after Oscar's site went dead.
There's not much to the digital audio circuit. Two chips, a crystal, a TOSlink connector and a power regulator are all you need. This could all be shoved inside the GC, and a digital-out jack installed for the ultimate GameCube audio.
CAUTION
I have completed this mod and it works great! Here are some pictures. Now i am really ready for a good beer:)
Datasheet for the TC9231N can be found here - TC9231N
TC9231N Pin functions and circuit connections: Coming soon!