Hi Justin,
Finally solved issue with DD and DTS pass-through it works both through SPDIF and HDMI. Some advanced options were hidden in XMBC which I didn't notice first.
Now regarding youtube judder issues. I have tried playing the same video over built in browser and there is no judder. But when I play using youtube app there is judder both in 720p and 1080p modes. I have tried to update youtube app using "Play store" with no success as judder still remains. Any ideas why is that ? Videos I was testing on were "Jay Leno Garage". Judder is not seen at the firs time, but after you look closer it starts to irritate a bit.