I figured it out!!
I finally figured out how to encode 5.1 AAC audio in my movies without using the Terminal! (the terminal method never really worked for me anyway... but this seems much easier)
1. Download
mAC3dec
2. Add AC-3 file and decode to AIFF, splitting the channels.
3. This gives you 6 AIFF files labeleled correctly for each channel.
4. Open all 6 AIFF files into Quicktime Pro. Pick one track (in this case, the center channel) and copy all the other channels onto it. After you paste each audio channel, assign it to it's corresponding channel in the QT Properties window. It will look like this, with each of the 6 sound tracks having their seperate channel assignments.
5. Now you can delete all the other audio files except for the one that has them all pasted together. Get info on that file and it should look like this:
6. Now export the audio file to a Quicktime Movie (NOT an audio file... it must be embedded into a QT movie). Click on Options to see the sound Settings.
7. Click on the Sound Settings button and make sure the format is set to AAC and the channels set to 5.1. You can set the encoder quality options however you'd like.
8. Then save it! This will take a long time because it is converting 6 very long AIFF files into AAC format, but it's worth it! When you open the QT movie you just saved, it will look like this... AAC surround sound!
9. Now all you have to do is add your audio to the movie. First open the movie and go to the Properties window. Delete the AAC 2.1 audio track first, and then paste on your 5.1 audio track. The final result:
OK so it's a really long process, but you'll get the hang of it. When you do this and add the chapter markers, you essentially have the whole DVD-video saved into a Quicktime file!