Well, for one it is impossible for the WDTV live to downmix DTS-TrueHD tracks for the simple reason they don’t exist… they’re from Dolby (Dolby TrueHD). It’s strange that the WDTV live can’t downmix these tracks though, since just like the DTS-HD MA tracks have a DTS core for legacy purposes, Dolby TrueHD have a standard 640 Kbit/s 5.1 DD track at their core: even if the WDTV live wouldn’t support the full lossless codec it supports the standard lossy core, if it doesn’t recognize it they need to upgrade the firmware.
In any case, if you don’t mind losing the lossless quality of your rips -not that you can make any use of the full lossless audio without a newish A/V receiver anyway- you can use a program like Eac3to (free) and rip the standard AC3 core from the TrueHD track, that should make it fully compatible with the WDTV live, and it will make those rips slimmer as well (640 Kbit vs 2-4 MBit/s).
Well I understand that, and I see no reason why they couldn’t fix that in the firmware if yours is not an isolated case, but that conversion I mentioned above doesn’t involve any transcoding: it is both very simple and very fast, and will save you around 2 GB per movie. Also take into account that anything less than a medium to high range sound system is gonna sound almost the same with a Dolby TrueHD track or its Dolby AC3 core. So, unless you are just ripping a bluray to your HDD everytime you wanna watch it, stripping the lossless part of the audio tracks is almost a must, otherwise you’re gonna fill up your HDD a lot sooner with sound info that is getting trounced during playtime.