You dont need to re-encode or pay out the butt for this feature!
You can extract the DTS core with eac3to or other free tools. Or you could go the MKV route and choose FLAC and/or keep the DTS-HD/DTS tracks.
regarding dts vs AC3... you will find mixed opinions about which is better, warmer, accurate, more depth etc... but generally they're are about the same with AC3 taking much less bitrate.
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