This guy (Jack Norris) is trying to get Digital USB Audio working on CyanogenMOD 10 for the Google Nexus:
http://forum.xda-developers.com/showthread.php?p=35191893&postcount=15
See a copy/past of his post below:
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CM10 USB Audio Support
I originally started looking into this as part of my Nexus 7 car project. Rebooting just to get USB audio working conflicted with my goal of being able to "dock and forget". It took a bit of experimenting and debugging but it's finally working 
These patches will enable full USB audio support on the Nexus 7. That includes USB audio hotplug support (no rebooting), it also allows the internal microphone to operate properly while connected. As long as you have a standard USB AUDIO CLASS compliant device then you should have no problems.
Kernel - wifi model only -- Source: git.io/srlGrg
The Nexus 7 must be running a kernel with USB audio support (or have the modules loaded separately). I have attached a stock CM10 kernel with USB audio built in but you can use any kernel compiled with USB audio support, Trinity and Poitee spring to mind. This kernel will only work with wifi models.
Services -- Source: git.io/214n3w
The WiredAccessoryObserver class (frameworks/base) has been modified to detect ALSA uevent's and pass the required details to the audio policy manager which then switches the output to the USB audio device.
Volume Control -- Source: git.io/HHh8TQ
Android does not allow you to control the music stream volume while attached to a digital output device such as a USB sound card / DAC, it is either mute or full volume. While this may not be an issue for those of you who have audio controls built into your USB devices, there are some that do not. Applying this patch will allow you to change the volume the same way as with a normal pair of headphones.
I have attached flashable zips for those of you who don't want to recompile sources. They have been tested against the 2012-12-04 CM10 nightly, they may work with other ROMs but I have only tested CM10. If not then the source patches could easily be applied to the source tree of most ROMs.
If all goes well and further testing doesn't show any issues I might try and submit patches AOSP/CyanogenMod.
Please let me know if you have any issues and I will do my best to resolve them.