Good to know guys, thanks.
For me it is not a huge deal. I mainly use my Dune player for streaming kids movies to the 2 channel TVs so the lack of 7.1 output isn't a big deal. Paying $1600 or so to replace the unit I have that "works" seems silly too. It would be nice if I could force the Dune to output 7.1 and then use the player itself to select a stereo downmix if needed. It would also be nice if I didn't get occasional video signal issues on 2 of the TVs when using the PS3 as a source.
But, if I put a $1 in a jar each time I had the issue, it would be loooooong time before I had enough to upgrade. Just one of the many hazards of HDMI video distribution as discussed ad infinitum in this forum.