I have a similar setup (ATV2, BV8, BS4 in "link" room, BL4s in real link room).
Last weekend I was trying to see if I could get the digital sound from the ATV2 translated by the BV8 and put onto the MasterLink for the remote rooms.
Maybe I was unlucky (i.e. incompetent 
) in my attempts to understand the Beo4's AV command, or the BV8 does not provide such translation; and maybe on the other hand the BV7 does do such translation (like you I seem to recall that function being added in the last one to two years by a patch upgrade).
If there is no patch upgrade, perhaps the way to go is to integrate an AirPort Express into the BS4's AUX-IN and broadcast via AirPlay from the iTunes source ? (would not get the same Interner radios as easily as the ATV2 ... pity; but would get your friend's music library). I had this set-up once ipon a time, 2 years ago.
Downside (or upside if you prefer) would be that ATV2 playing and the AirPort Express playing would not synchronised (i.e. to play the same music tracks, you would have to push Airplay to the ATV2, rather than the ATV2 pulling the music from iTunes).
But I would be interested if someone else remembers/finds the thread where the translation down from digital audio and analogue audio was done by the BVs .......
First B&O (1976) was a Beogram 1500 ... latest (2011) change has been to couple the BL11 with the BL6Ks *sounds superb*