You need an adapter to connect a mini optical jack to a regular optical cable.
You can find this adapter at Radio Shack.
Toslink To Mini Adapter, Item# 15-1584
Your plan will work.
Some pcdps have better digital outs than others.
I am in the process of gathering several pcdps with digital outs to compare.
Also, NEC made some external SCSI CD-ROMs with digital coax outs.
These would also work, but are bigger than pcdps.
Here is the list of players I am going to try to use in my comparison:
Sony D-303
Sony D-465
Sony D-555
Sony D-E805 or D-E705 (I think the only difference in these two is a few
features that I won't use)
Aiwa XP-7
Panasonic SL-SX510 Japanese model
Panasonic SL-CT570 Japanese model
Optimus CD-3400 or Akai PD-X73 (These are the same player, just a different name.)
External SCSI CD-ROMS with digital coax outputs:
NEC 3XP (top loader) or NEC 6XE (caddy loader)