Apple Powerbook "Optical Digital Out"

I just bought the new Powerbook (got here yesterday). I am thinking about scrapping my cd player and using this exclusively through some USB DAC(maybe the wavelength or sutherland) but the comp says that one of the audio outs is an optical digital signal but to me it looks just like a headphone jack. So can someone explain what this is and how it works and if there are and DACs that will connect to this sort of output. Also, is it even worth it or should I go the USB route? Much thanks for any help
I believe the jack actually is outfitted so that there is a optical driver in the center of what would be the pin--its a multipurpose connector. So, you should just be able to get an optical connector outfitted one of those or get an adapter...
You can get an adapter at Radio Shack.

Outboard DAC's such as the Headroom Micro DAC will accept an optical S/PDIF digital input.

Link is:
Monster also sells one designed for the Apple Airport express, the stereo mini to digital optical out. I was hoping to get one with a digital RCA out to connect directly to my DAC, but unfortunately that particular mini doesn't seem to suppor that configuration. I assume yours is similar.
The Monster Cable kit for the Airport Express has a cable that will work. On one end it has a "hollow" 1/8 plug and on the other end a regular Toslink. Just make sure that the DAC can has a Toslink input.
sounds good, thanks all
Thanks for reminding me my Powerbook is now outdated.....
I am considering the same route you have taken. Could you please keep me posted as to what you have decided to do as far as the dac and also what type of connection you are using. Your help would be much appreciated.