Zion: there are lots of guides on Doom9, each with different methods. I am using one that uses completely free software based on VST plugins which gives amazing results. The AC3 encoder is called Aften, which is a very new codec that is very fast and seems to sound as good as SoftEncode (so, like pretty much all commercial encoders including Scenarist's and Vegas's).
I'd really like for the XØ to listen to some files encoded with thsi method, I can encode some samples for you or send you the guide and all necessary software via PM.