I've searched long and hard on the Internet for a solution and came up with several leads:
I found 3-4 DACs in the $300-400 price range that should do an excellent job of conversion. I even found a car MP3 project that was using the M-Audio Flying Cow:
All of these products accept 9V AC or 120V AC (w/ power pack) but not DC. In theory all are probably rectifying and regulating the AC to 5VDC before doing anything. If that's the case, you should be able to run 5VDC from a PSU directly into them. Or if your using a power inverter, just plug in the included power pak. The Flying Cow needs a optical to coax converter, but web searches easily turn up those.
Another solution is to use a digital preamp and cross-over from an established car audio manufacturer. Sony, Poineer, Kenwood, Alpine and others all make various flavors that will do everything from band-pass filtering, to time alignment, to full blown AC3 & DTS decoding. However all of them require a head unit from the same vendor. There are some help pages out there that give some good starter info on the bus control protocols for Sony, Pioneer, Blaupunkt, and Kenwood, but they are all geared towards how to make you computer look like a CD changer to the head unit.
The only decoder I have yet to get specifics on is one made by Sherwood. I can't seem to find much information on the net, however there are a couple forum members using them. Guys if you have any info, please follow up.
I'm bidding on a Sony XDP-4000X digital DSP at the moment. If I win it, I plan on borrowing a CDX-90 head unit from a local audio shop and building off of what Internet knowledge currently exists for Sony Unilink to reverse engineer the command set. I'll post my results once they are known.
One thing to be aware of, some audio card drivers will not do volume control on the digital outputs because it means software scalling the output samples instead of using a hardware mixer. So you may need to soft-scale the volume in your application software or buy a amp/preamp with a remote gain control.