"Hi seaspray07,
"Hope this clarifies."
sorry it doesn't - it confuses me and I don't get why you want to do it this complicated way ;-)
1. If you have problems try to simplify your workflow. Why do you try to work with dynamic link in Encore? This isn't the classic route and I don't see why you need it in this case.
2. In a classical workflow you load final encoded audio and video files in Encore - in this case a .m4v and a .ac3 file encoded in Adobe Media Encoder.
3. To get this files you create a Premiere timeline with 5.1 master audio and load your clips onto it.
For all 5.1 clips Premiere will create a 5.1 audio track. For all stereo clips Premiere will create a stereo audio rack.
--> Keep in Mind you can't export a premiere audio track. That isn't possible even though this would be handy in a lot of situations. You alway only export the master audio track of a timeline. That master audio track get's it input from all audio tracks of a timeline. If there is a 5.1 audio track 6 channes are mixed to the master audio - if it's only a stereo track only L, R get's mixed up to the 5.1 master.
The master audio track is what you can hear if you play back a timeline.
4. Why do you want to convert stereo audio tracks into 5.1 audio tracks in the timeline? It needs much more filesize/ ram slows down your playback and gives you a unhandy viewing with lots of emty audio channels... Why dont store and view a stereo track as a stereo track?
5. If you have placed your stereo and 5.1 audio tracks on the timeline you can export the final mix via Adobe Media Encoder with the Surcode plugin as Dolby Digital 5.1 .ac3
"I sent the audio to Audition because I wanted to modify the audio file from stereo to 5.1, and bring it back into PrPro to combine with the video clip from the corresponding MTS file..."
That doesn't make any sense... because Premiere does it automatically for you without Audition. You simply have to do nothing - just place your stereo clip on the timeline and ready.
If you want to use Audition you have to have a real reason for it - for example do extensive audio work and mastering Tasks - conform it to R128 loudness or something like that.
Does this make sense to you? ;-)