Is there any device that I can connect an HDMI to that will basically extract, or break apart the audio coming from the HDMI where I can output a toslink optical cable with a lower quality than what's coming in the HDMI?

Basically I want to have 7.1c uncompressed HD surround sound audio going through the HDMI into X device where I can then connect an optical cable from that in order for 5.1c compressed audio can be outputted. Is this possible?

Most HDMI sources also have a digital coax output, as well. There are external devices to do this, too. See Zektor and Gefen.

I'm sorry, see who? Are they members here?

And is this such a device that you're talking about?

http://www.directron.com/hdmisw2hf.html

I'm sorry, see who? Are they members here?

And is this such a device that you're talking about?

http://www.directron.com/hdmisw2hf.htmlSimilar.
www.gefen.com
www.zektor.com

More expensive than the Apogee you link to.