I think you're limiting your choices, although a USB to S/PDIF converter isn't a bad idea. Other options include using Toslink directly from the iMac (the mini-Toslink connector is shared with the headphones adapter) and using an ethernet-based system such as a Squeezebox.
I've used both the USB and Toslink options and I can't tell the difference between them.
Michael
I've used both the USB and Toslink options and I can't tell the difference between them.
Michael