Can I limit the digital out on the 970 to 2-channel (even 16/44.1) but leave the DDig in place so I can still feed the center and rear channels?
No - as far as I know, the digital output is a pure pass-through, so whatever digital signal is sent to the 970 will be passed on to the output.
I'm guessing the 970 won't allow me to do this and that I'll have to get an intermediate box between the 970's digital output and the 2 channel DAC that splits out the front two channels.
I'm not sure that's going to be possible. The only way to split the digital signal in this manner is to be able to decode Dolby Digital and DTS bitstreams, at which point you have a set of signals (six digital channels) that won't all fit across any digital output except HDMI. I suppose that it could abandon everything except those two channels, but that is a specialty need that may not exist...