I must say that is a novel work around for having a crappy sound card but I suggest you look into exactly how AC3 works because it is certainly not lossless.
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AC-3 perceptual coding is a data-compression scheme that seeks to eliminate the data we cannot hear while maintaining all the information that we can. AC-3 divides the audio spectrum of each channel into narrow frequency bands that correlate closely to the frequency selectivity of human hearing. That allows coding noise to be very sharply filtered by taking advantage of the psychoacoustic phenomenon known as auditory masking. Coding noise stays close in frequency to the audio signal being coded, so it is effectively masked. AC-3 uses a "shared bit-pool" arrangement to use data as efficiently as possible. Bits are distributed among the various channels according to need. AC-3 allows multichannel surround sound to be encoded at a lower bit rate than required by just one channel on a CD.
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