Yeah you are correct, 7.1 does seem to be dying off, and with the new forms of audio, like atmos you need the bandwidth of HDMI to pass it from the computer to the receiver. I am just in a bit of a unique circumstance. I have an Atmos receiver that is set up with 2 ceiling speakers, so it is bascially a 7.1 setup with playing non atmos media, but my TV (Q80T samasung) will not passthrough 5.1 and 7.1 audio from the HDMI going from the videocard to the TV, to the HDMI in the eARC on the TV going to the receiver. For some reason it will only pass through stereo and Atmos signals. I have contacted Samsung and they are working on a fix for a future update, but for now I cannot get 5.1 and 7.1 to work.Not that I want to detract from your setup but I think 7.1 is dying off in the market. I bought a 5.1 setup specifically because so little media is actually made to use 7.1. Almost every surround sound standard used for TV, games, movies is 5.1 of some type. If they add more channels than 5.1, it's not for 7.1 audio, but for height channels like in Atmos.
I haven't experienced a 7.1 setup in ages now, but given how similar a properly setup 5.1 sounds it's no surprise that all of the major film publishers and streaming services and AV equipment manufacturers are focusing on 5.1 variants. I'd hang onto your X3 for as long as you can, I can't see 7.1 hardware going mainstream again any time soon.
I have tried using the optical out on my motherboard, but the realtek drivers wont work (SO ANNOYING), so anyways I decided to try a sound card and I reached out to Creative and asked about a 7.1 card and they told me they had nothing so, I settled on the AE-5 plus, it at least 5.1 Dolby digital so when I am playing games that don't support Atmos I could get surround that worked. For example Red dead 2 will not work with Atoms, the back channels and the centre sound is all messed up, so I needed the AE-5 to get the surround audio to work. Anyways, seeing I have a 7.1 set up I wanted the option to use all my speakers while gaming even if Atmos wasnt available, so I kept looking and found the X3 a couple of weeks after buying the AE5 plus. With the X3 I get the best of both worlds. It does 5.1 dolby digital, like the AE-5 plus, and it does discrete 7.1, so I can use all my speakers even without Atmos. And then any games that have Atmos tracks I can just switch to my HDMI audio and I am good to go.